Griffin Mining Ltd. Annual Report 2013

← All annual reports

FY2013 Annual Report · Griffin Mining Ltd.

Loading PDF…

CONTENTS

CHAIRMAN’S STATEMENT

OVERVIEW

CAIJIAYING

INTRODUCTION

DEVELOPMENT

GEOLOGY

JORC RESOURCE

EXPLORATION

OPERATIONS

COMMUNITY INVESTMENT & PARTNERSHIP

FINANCIAL

STRATEGIC REVIEW

DIRECTORS

SENIOR EXECUTIVES

DIRECTORS’ REPORT

REPORT OF THE INDEPENDENT AUDITOR

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

ACCOUNTING POLICIES

NOTES TO THE FINANCIAL STATEMENTS

CORPORATE INFORMATION

R E P O RT A N D A C C O U N T S 2 0 13

Page

Griffin Mining Limited is a mining and investment company whose principal asset is the Caijiaying zinc-gold
mine. Further information on the Company is available on the Company’s web site: www.griffinmining.com.

Griffin Mining Limited’s shares are quoted on the Alternative Investment Market (AIM)
of the London Stock Exchange (symbol GFM).

Registered number: 13667 Bermuda.
Registered Office: Clarendon House, 2 Church Street, Hamilton HM11, Bermuda
United Kingdom office: 60 St James’s Street, London SW1A 1LE

G R I F F I N M I N I N G L I M I T E D

R E P O RT A N D A C C O U N T S 2 0 13

Caijiaying Mine, Winter 2013

G R I F F I N M I N I N G L I M I T E D

CHAIRMAN’S STATEMENT

I present to you, the shareholders and owners of

Profitability was affected by a 15.2% increase in the

Griffin Mining Limited

(“Griffin” or

the

cost of sales, mainly due to increased treatment

“Company”), the Annual Report and Accounts of

charges, and decreased metal prices. In 2013, the

the Company for the 2013 financial and calendar

average price per tonne of zinc metal in concentrate

year. For those of you who have known me too

received by the Group fell by 5.2%, for silver by

long, you will know that I am a long-time,

26.3%, for lead by 12.0% and for gold by 17.7%.

passionate, Chelsea FC supporter and, in many

ways, the performance of Griffin resembles Chelsea

FC’s 2013/2014 season. A Champions League

semi-final and a top 3 Premier League spot are

admirable results but the time honoured quote

comes to mind “Close, but no cigar.” Similarly, a

company is judged by continually improving

One of the most significant events during 2013 was

the release of the latest JORC resource estimate for

the Caijiaying Mine. It confirmed a total resource

of 49.4 million tonnes of ore containing 2 million

tonnes of zinc, 212,000 tonnes of lead, 37.9 million

ounces of silver and 825,000 ounces of gold.

financial results and although the Company’s

The extensive and defined ore resources at the

operations performed extraordinarily well, the new

Caijiaying Mine, together with the extension of the

JORC resource was world class, the upgrade and

term of the Hebei Hua Ao joint venture to 2037,

mining licence approvals continued to progress and

provided the confidence and time to expand the

certain operating records were broken, the

current mining and processing capabilities to catch

continuing slump in the price of the commodities

the expected upturn in the zinc price cycle and

mined produced a diminished financial result, albeit

provide the maximum return to shareholders.

the Company produced its 9th year of continued

profitability.

With this in mind, the Caijiaying Mine is now in

the active construction stage of increasing the

Griffin and its subsidiaries (together the “Group”)

mining and processing of ore to 1.5 million tonnes

recorded an operating profit of $20,293,000 in

per annum. Significant progress continues to be

2013, profit before tax of $14,827,000, profit after

made in the application for a new mining licence at

tax of $9,756,000 and profit after non-controlling

Zone II and the area between Zone II and Zone III.

interests of $8,157,000.

Impressively, record amounts of ore were mined,

hauled and processed in 2013 and a record 11,468

ounces of gold in concentrate were produced, a

37.8% increase on the previous year and a record

for the Caijiaying Mine.

Although delayed due to the change in Chinese

central government leadership and administrative

changes ensuing from that change, the mining

licence is expected to be granted by the Autumn of

2014.

R E P O RT A N D A C C O U N T S 2 0 13

In the interim, the detailed upgrade plans have

which were already pregnant with 47 offspring,

been completed and the lead contractor appointed.

establishing a sizeable initial herd of 217 cattle for

Tenders for the large capital machinery, with long

the creation of a dairy and cattle farm. To date, the

lead times to delivery, have been granted. Ground

venture has been an outstanding success and it is

work for the upgrade has commenced with the

planned to purchase another 183 cows by June next

foundation earthworks ceremony having taken

year to complete the programme and finalise a new

place, with all appropriate Chinese government

industry for the local population.

officials present, on the 8th of April 2014. All

above ground, new, expanded facilities, including

ball mills, floatation tanks and a new power sub-

station, should be installed during the summer

months ready for completion by the 31st October

2014 to enable winter work to continue indoors

and underground.

Development work has

commenced

to access

the Zone

II area

underground from both the rehabilitation of the

Fox decline and from the main Zone III decline.

It should not be thought, however, that the

Company’s only focus is the expansion of the

Caijiaying Mine. Exploration continues unabated

both underground and on the land holdings north,

south, east and west of the current operations.

Furthermore, the Company remains totally

committed to searching, investigating, analysing

and negotiating the acquisition of low cost, base

or precious metals mining projects that have the

potential to be brought into long term, economic

The total upgrade is expected to be completed by

production for a capital cost that provides a

the end of 2014. It is hoped that throughput will

substantial and justifiable return on equity to

slowly be expanded towards the equivalent of 1.5

shareholders. Such projects are rare and getting

million tonnes of ore per annum in 2015.

rarer. Nevertheless, a considerable number of

Of course, Griffin, through Hebei Hua Ao,

continues to be a responsible and vital member of

the Caijiaying community. In addition to all the

previous and ongoing community programmes, in

2013 a new initiative was begun to create a long

term industry which would provide a more

sustainable annual income for villagers less reliant

projects and ventures have been reviewed and

investigated during the past year. None as yet have

been successfully consummated, mainly due to the

discovery of negative findings during due diligence

or an insufficient return calculated for the risk

shareholders would need to accept in funding the

project to production.

on the seasonality of crops grown in the short

In terms of the Company’s current operations and

summer months. Consequently, Hebei Hua Ao

possible future acquisitions, the strategy being

purchased for the Caijiaying village area, 170 cows,

pursued is supported by the projected outlook for

G R I F F I N M I N I N G L I M I T E D

CHAIRMAN’S STATEMENT CONTINUED

the world zinc price. 2014/2015 is expected to see

As is normally the case, we often fail to

world demand for zinc exceed supply by 400,000

acknowledge those who are nearest, dearest and

tonnes, continuing for the foreseeable future.

work hardest for the Company. Bo Zhou, our

Demand is expected to expand 4.5% – 5.5% to 13.6

Chief Representative in China, is one of the pillars

million tons this year whilst supply is being

this Company is built on and to fail to acknowledge

substantially affected by a limited number of small

his outstanding services would be simply unjust.

new mines in the planning stage and a series of very

large mine closures including Glencore Xstrata’s

Perseverance and Brunswick mines, Vedanta’s

Lisheen operation and MMG’s Century Zinc mine.

This can only be positive for the world zinc price.

The Company lost the services of Bill Mulligan due

to retirement this year and his advice, stature and

wit will be sorely missed. Such a man could only

be replaced by someone like Rupert Crowe who I

have described in earlier reports as the “Champion

In terms of the perennial question of dividends, the

of Caijiaying”. His experience, enthusiasm and

Company continues to follow the advice of the

common sense is a boon for the Company.

Chairman and CEO of one of its largest

shareholders, Larry Fink of Blackrock who, in an

open letter to UK listed companies, urged firms to

resist influence by shareholder short term pressures

and not make short term dividends a priority over

long term strategic goals but to invest in capital

expenditure to boost long term growth. Needless

Adam Usdan, one of our major shareholders, finally

agreed to become a director this year after being

our foundation shareholder and only increasing his

shareholding through the long years. His loyalty

has been unwavering and his appointment another

coup for the Company.

to say, when the growth phase of the Company

Dal Brynelsen remains the vital wise mining legend

comes to an end, then dividends are an absolute

on who’s support I constantly call. Lastly, and as an

legitimate use of excess shareholders funds.

example of the tireless and self sacrificing service

The Company is delighted to welcome a totally

new management team on site headed by our new

Operations manager, Mr Maoheng Zhang,

supported by CSA Global in Perth. To date, his

new on-site team have met all of our expectations

and everyone is excited by what lies ahead. They

have our total support. Our thanks also go to all

one man can provide, the Company gives it

gratitude to Roger Goodwin who, through

extremely serious illness and gruelling therapy,

continued not only to work, but attended the office

at the break of dawn every day and continued to

travel to Caijiaying. Such service deserves all of our

sincere thanks and respect.

at Caijiaying staff and contractors, for their untiring

Lastly, and believe me when I say, most

efforts to make Caijiaying the world class mine it

importantly, thank you to you, the shareholders and

seemed destined to become.

owners of the Company. Without your patience,

R E P O RT A N D A C C O U N T S 2 0 13

support and long loyalty, Caijiaying would have

remained an undiscovered world class orebody,

buried under some Mongolian sands, next to a

small village in north-western China. Instead it

now has the real chance to be a significant, long

term, polymetallic mine generating exceptional

returns for its shareholders. And in the words of

Mel Gibson’s William Wallace in Braveheart, “And

I go to make sure that they have it”.

Mladen Ninkov

Chairman

12th May 2014

G R I F F I N M I N I N G L I M I T E D

R E P O RT A N D A C C O U N T S 2 0 13

Mladen Ninkov (Chairman) at the earth turning ceremony for the plant upgrade at Caijiaying

G R I F F I N M I N I N G L I M I T E D

OVERVIEW

Griffin Mining Limited

(‘Griffin’ or

‘the

The Company also owns 90% of Hebei Sino Anglo

Company’) is a mining and investment company,

Mining Development Company Limited (“Hebei

incorporated in Bermuda, whose shares are quoted

Anglo”), which controls 41.5 square kilometres of

on the Alternative Investment Market of the

exploration licences immediately surrounding the

London Stock Exchange.

Caijiaying Mine.

The major asset of the Company is an 88.8%

The Company continues to expand and develop the

interest in Hebei Hua Ao Mining Industry

Caijiaying Mine whilst aggressively analysing

Company Ltd (‘Hebei Hua Ao’), the holder of 11.3

further potential acquisitions of mining projects,

square kilometres of mining and exploration

preferably in base metals, that are capable of being

licences and the owner of the mine and processing

brought into production and satisfy historically

facilities at Caijiaying in the Peoples Republic of

preset economic returns to shareholders.

China (the “Caijiaying Mine”).

Caijiaying Mine Location

CAIJIAYING

INTRODUCTION

The Caijiaying Mine is an operating zinc, gold,

silver and lead mine (together with the Camp

comprising staff accommodation, recreational and

mess facilities) located approximately 300 kilometres

by road, north-west of Beijing in Hebei Province.

The Caijiaying Mine site is easily accessible by two

alternative freeway systems from Beijing and a

R E P O RT A N D A C C O U N T S 2 0 13

through its wholly owned Hong Kong subsidiary

China Zinc Limited, purchased an additional

28.8% interest in Hebei Hua Ao from the

Zhangjiakou Guoxin Enterprise Management and

Service Center in 2012. Griffin now holds an

88.8% equity interest in Hebei Hua Ao and the

Zhangjiakou Guoxin Enterprise Management and

Service Center retains an 11.2% interest. In

addition, and as part of this purchase agreement,

number of secondary sealed roads. The site has

the term of the Hebei Hua Ao joint venture was

significant water supplies, two

independent

extended until October 2037.

connections to the electricity grid, full connectivity

to fixed and mobile tele-communications systems

and broadband access for internet services. Climatic

conditions are not severe with warm summers and

cold, dry winters enabling operations at Caijiaying

to continue for 365 days a year.

DEVELOPMENT

In January 2004, a second contractual joint venture

company, Hebei Anglo, was formed to hold the

mineral rights to the area surrounding the original

Hebei Hua Ao licence area and any other areas of

interest in Hebei Province. Griffin, through its

wholly owned UK subsidiary, Panda Resources

Limited, has a 90% interest in Hebei Anglo whilst

the Zhangjiakou Guoxin Enterprise Management

Hebei Hua Ao is a contractual co-operative joint

and Service Center holds 10%. Griffin, through

venture company entity established in 1994.

Hebei Hua Ao and Hebei Anglo, has a controlling

Initially, Griffin held 60% of Hebei Hua Ao

interest in mining and exploration licences over

(through a wholly owned subsidiary) with the

approximately 53 square kilometres at Caijiaying.

remaining 40% held by the Zhangjiakou Guoxin

Enterprise Management and Service Center (the

previously named Zhangjiakou Caijiaying Lead

Zinc Mining Company), the shareholders of which

remain the Zhangjiakou City People's Government

and the Third Geological Brigade of Hebei

Province.

Following

extensive

exploration,

resource

delineation drilling, a number of scoping studies,

feasibility study, financing and construction,

Griffin successfully commissioned the Caijiaying

Mine on time and within budget in 2005. The

initial design production throughput rate of

200,000 tonnes of ore per annum has steadily

The initial term of Hebei Hua Ao was 25 years and

increased since commissioning with processing

was due to expire in 2019. In light of the continuing

rates in excess of 840,000 tonnes of ore per annum

increase in the resources base and production

having been achieved following the upgrade of the

profile of the Caijiaying Mine, the Company,

processing facilities in 2010.

G R I F F I N M I N I N G L I M I T E D

In December 2007, production of a separate

Jurassic

intrusives have replaced favourable

precious metals concentrate containing gold, silver

horizons in the metamorphic rocks, most notably

and lead, commenced from an integrated circuit

calcsilicates and marble. Porphyry sills and dykes

forming part of the main processing facilities at the

intruding along faults have then cut across the

Caijiaying Mine. This allowed the full economic

sequence.

benefit of these metals to be obtained by the

Group. Previously gold, silver and lead were "lost",

unaccounted and unpaid for in the zinc concentrate

sold to the Chinese metals traders and smelters.

Ongoing exploration in the area surrounding the

Caijiaying Mine and within Hebei Hua Ao's and

Hebei Anglo's tenement boundary continues to

confirm the area to be highly prospective,

The Company is now in the process of increasing

indicating significant potential for further base

the mining and processing of ore at the Caijiaying

metal and gold deposits.

Mine to 1.5 million tonnes per annum. This will

include a doubling of the already expanded

JORC RESOURCE

processing facilities, a new power sub-station, a new

In October 2013, the latest JORC Mineral

crushing circuit, the underground development of

Resource Estimate for the Caijiaying Mine was

Zone II and an expansion of the existing mining

produced at a zinc cutoff of 1%, the highlights of

operations at Zone III. These developments are all

which are outlined below:

subject to the successful granting of a new mining

licence over Zone II, which will also include the

area between Zone II and Zone III. This is not

• A 215% increase in Measured Resources for the

current mining area of Zone III.

expected to occur prior to the end of the third

• 74% of the Zone III resource was placed in the

quarter of 2014. By that time, the boundary survey,

Measured & Indicated Categories.

feasibility study and environmental impact study

should have all been completed and underground

development work at both Zones II and III well

• Zone III resource of 29.8 million tonnes @ 4.7%

Zinc, 0.2% Lead, 23.4 g/t Silver & 0.7 g/t Gold.

under way. The total upgrade is expected to be

• Total Resource of 49.4 million tonnes @ 4.1%

completed by the end of 2014.

Zinc, 0.4% Lead, 23.9 g/t Silver & 0.5 g/t Gold.

GEOLOGY

• Total contained metal of:

Mineralisation at Caijiaying is believed to be related

* 2 million tonnes of Zinc

to a Jurassic igneous event that affected the 2.3

* 212,000 tonnes of Lead

billion year old metamorphic basement rocks. Base

* 37.9 million ounces of Silver

metal and gold mineralisation associated with

* 825,000 ounces of Gold

R E P O RT A N D A C C O U N T S 2 0 13

The success of the infill and extension drilling

the Company has undertaken a major review of the

program, along with on-going mine development,

data collection and management processes, grade

has allowed for the reinterpretation and upgrade of

control, mine planning and mine reconciliation to

the Zone III Mineral Resource. A significant

optimise production at Caijiaying. This work will

portion of the Mineral Resource was confirmed in

also allow the Company to adapt its plans to take

the higher Measured and Indicated categories and

advantage of a predicted future increase in the zinc

this material will underpin mining operations for

price due to pending market supply/demand issues.

many years to come. Drilling is continuing and

further drilling access is being provided by new

underground mine development.

The updated 2013 Mineral Resource estimate is

reported at a zinc cut-off grade of 1%. No update

was undertaken on the Zone II mineralisation.

Griffin continues to work on a revised resource

The revised Caijiaying Mine resources are

model for mine planning purposes. In addition,

summarised below.

Caijiaying Zone III Remaining Mineral Resources June 2013
Grade Tonnage Reported above a Cut off Grade of 1% Zn

Tonnes
(Mt)

14.0

8.1

7.7

29.8

Zn
(%)

5.0

4.5

4.2

4.7

Pb
(%)

0.3

0.2

Ag
(g/t)

26.6

22.5

18.5

23.4

Au
(g/t)

0.8

0.7

0.5

0.7

Zn Metal
(t)

701,000

362,000

323,000

1,386,000

Pb Metal
(t)

42,000

14,000

12,000

68,000

Ag Metal
(Oz)

Au Metal
(Oz)

11,986,000

5,835,000

4,560,000

22,381,000

359,000

173,000

129,000

661,000

Caijiaying Zone II Remaining Mineral Resources May 2012
Grade Tonnage Reported above a Cut off Grade of 1% Zn

Tonnes
(Mt)
-

4.1

15.6

19.6

Zn
(%)
-

3.0

3.3

Pb
(%)
-

0.7

0.8

0.7

Ag
(g/t)
-

24.9

24.5

24.6

Au
(g/t)
-

0.3

Zn Metal
(t)
-

123,000

516,000

Pb Metal
(t)
-

27,000

Ag Metal
(Oz)
-

3,243,000

117,000

12,277,000

638,000

144,000

15,520,000

Au Metal
(Oz)
-

39,000

124,000

164,000

Caijiaying Combined Global Remaining Mineral Resource

Grade Tonnage Reported above a Cut off Grade of 1% Zn

Tonnes
(Mt)

14.0

12.1

23.2

49.4

Zn
(%)

5.0

4.0

3.6

4.1

Pb
(%)

0.3

0.6

0.4

Ag
(g/t)

26.6

23.3

22.5

23.9

Au
(g/t)

0.8

0.5

0.3

0.5

Zn Metal
(t)

701,000

485,000

839,000

Pb Metal
(t)

42,000

41,000

Ag Metal
(Oz)

Au Metal
(Oz)

11,986,000

9,078,000

359,000

212,000

253,000

825,000

129,000

16,837,000

2,024,000

212,000

37,901,000

Category

Measured

Indicated

Inferred

Total

Note: Zone II Mineral Resource includes 1.49 million tonnes at 3.09% zinc oxide material. The Caijiaying Deposit is a polymetallic (Zn, Au, Pb, Ag),
multi-generational deposit hosted within deformed amphibolitic and calc-silicate gneisses and schists with minor marble. The Mineral Resource estimate is
based on 2,470 underground diamond drill holes and 579 surface drill holes at Caijiaying. The underground drilling was carried out using nominal fan
patterns of 20m by 20m, grading to a 40m by 40m pattern at depth. Resource wireframes were interpreted by CSA Global Pty Ltd ("CSA") in consultation
with Griffin geologists. The resource outlines were based on mineralisation envelopes prepared on cross-sections using a nominal 1% Zn cut-off grade.

G R I F F I N M I N I N G L I M I T E D

EXPLORATION

Hebei Hua Ao Mining & Exploration
Licence Area

Drilling activity continued underground at Zone

III with up to 5 rigs operating during 2013. A total

Hebei Anglo Exploration Licence area

The major exploration activity in 2013 outside the

Caijiaying Mine was a diamond drilling program at

the Magpie Zone, an exploration target located

between Zone V and the F45 regional controlling

of 392 holes were drilled for some 36,769 metres.

fault.

Drilling was focused on increasing the Mineral

Resources, both along strike and at depth. Primary

targets were north, south and depth extensions of

Fu Long; south and depth extensions of Qing

Long; south extensions of Ju Long; north extensions

to Zone II and infill in the areas of Inferred Mineral

Resources which underlie Zone III.

Extension drilling of the Fu Long, Qing Long and

Ju Long lodes intersected significant base metal

mineralisation up to 200 metres below the lowest

development level. Drilling is regularly extending

below the 1000RL level, a vertical distance of 500

metres below the level of the mine portal.

Mineralisation remains open below the deepest

intersections and the down-dip extension of the

zones will be tested with further drilling as mining

continues deeper at Zone III.

The Magpie Zone was chosen as an exploration

target after the recognition of a major underground

fault, the Grasshopper Fault, in the Zone III mine.

This fault has a close spatial relationship with base

metal mineralisation on the western side of Zone

III and Zone II. A similarly orientated fault has

been recognised immediately to the west of Zone

V and the area south of this is therefore considered

prospective based on the analogous setting to that

of Zone III and Zone II to the east.

A total of 2,978 metres were drilled in eight holes

at the Magpie Zone targeting base metal and gold

mineralisation of a similar style to that at Zone III.

The drilling intersected high-grade zinc and lead

mineralisation in structurally-controlled, high-

angled, veins. Gold mineralisation was also

intersected, however, the massive, replacement-

style mineralisation seen in Zone III was not found.

Extensional drilling targeting Qing Long South

The veins are similar to the style of mineralisation

and Zone II North returned positive results with

seen in Zone V located immediately to the north.

significant base metal intersections seen in both

drill programs. These two areas appear to have a

2014 Exploration

complex structural relationship and may represent

originally a single zone of mineralisation offset by

northeast-southwest faulting.

During 2014, exploration activities will focus on

Zone III, Zone II, the corridor between Zone III

and Zone II and regional targets within the

exploration licences.

R E P O RT A N D A C C O U N T S 2 0 13

At Zone III, additional underground exploration

completed in 2014 and will substantially improve

will be completed in an attempt to continue to

ventilation and access for near-mine exploration

increase the size of the Mineral Resources.

drilling activities.

Particular attention will be paid to further

definition of gold rich mineralisation which appears

to be increasing with depth. Several of the zinc-

gold lodes at Zone III remain open either along

strike or at depth or both and these will be

scheduled for further drilling.

Regional exploration will concentrate on the

possible northern extension of the Zone III

orebody (to the north of Caijiaying Village). This

area is considered very prospective as the Zone III

mineralisation remains open to the north and the

area has not been tested by drilling. The depth to

A major underground drilling program is being

metamorphic basement deepens to the north and

planned to further define and understand the

additional ground geophysical surveys may be

mineralisation in the Zone II - Zone III corridor.

undertaken to assist with structural interpretation,

Drilling will focus both on zinc rich areas and gold

targeting and to give an indication of depth of

rich/zinc poor areas. The underground drive

cover. If priority targets are identified and target

providing access to this area, linking the Fox

depths are considered reasonable, exploration

decline with the main decline, is expected to be

drilling will follow.

Caijiaying Mine Exploration Area

G R I F F I N M I N I N G L I M I T E D

OPERATIONS

stopes opened and greater use being made of

mechanised mining methods with faster rates of

The processing plant has performed above the

design capacity treating a record 838,431 tonnes of

extraction.

ore during 2013. Throughput was constrained by

During 2013, a record 877,803 tonnes of ore were

the safety production permit rather than mill

mined and a record 914,919 tonnes of ore hauled,

capacity.

In order to maximise the amount of extractable ore,

mining was restricted to the upper levels of the

Caijiaying Mine throughout 2013. This resulted

grading 4.93% zinc. By the 31st December 2013,

129,000 tonnes of ore were stockpiled at surface

to be processed during the Chinese Spring Festival

when mining is traditionally suspended.

in the grade of ore processed falling to 4.9% zinc,

Further development work was undertaken during

0.25% lead, 0.78 ounces per tonne silver whilst

2013 with 317 metres of capital development drives

gold increased to 0.03 ounces per tonne. With

and 467 meters of exploration drives completed. In

improved recoveries 39,724 tonnes of zinc, 1,553

addition, 283 metres of driving towards the Zone II

tonnes of lead, 323,808 ounces silver and 11,468

area was undertaken and the main "south" and

ounces of gold in concentrate were produced. Zinc

"north" declines were further extended by 117

in concentrate production was in line with 2012.

metres. During 2013, 7,132 metres of operational

Lead and silver in concentrate production was

and development drives were completed. This has

lower than in the previous year. Gold production

enabled the lower levels of the mine to be accessed.

not only exceeded 2012 production, but was a

Long hole stoping continues to be the predominate

record for the Caijiaying Mine.

mining method.

The metallurgical recovery of all metals exceeded

Remote bogging continued to be used to remove

that achieved in 2012. The complexity of the gold

ore left in previously mined stopes and increased

mineralogy often made recovering more than 50%

the recovery of ore from stopes mined during the

of the gold in situ difficult. Metallurgical work is

year.

ongoing to increase gold recoveries with recoveries

of up to 60% achieved in early 2014. Additional

flotation cells have recently been installed which

seem to have had a positive impact on further

increasing gold recoveries.

50% of the tailings were backfilled into the mine in

2013, thereby not only reducing the amount of

tailings facilities required at surface, but also

improving the stability of the Caijiaying Mine. In

July 2013, a Dry Tailings facility was commissioned

Mining rates have continued to be increased to

at the Caijiaying Mine further reducing the volume

meet the enhanced processing capacity with more

of tailings going to the surface tailings facilities.

R E P O RT A N D A C C O U N T S 2 0 13

COMMUNITY INVESTMENT & PARTNERSHIP

In 2013, Griffin, through Hebei Hua Ao, instituted

Griffin, through Hebei Hua Ao, has invested

heavily in the local community and instigated best

practices regarding

the protection of

the

environment. In this regard:

a programme to create a long term industry for the

Caijiaying local village, in particular, to provide a

more sustainable annual income less reliant on the

seasonality of crops grown in the short summer

months. To that end, Hebei Hua Ao purchased 170

• Solid and liquid wastes are not disposed of into

cows, which were already pregnant with 47

the environment;

• All production water is recycled;

offspring, creating a sizeable initial herd of 217

cattle for the creation of a dairy and cattle farm. To

date, the venture has been an outstanding success

• Gas emissions from boilers are treated to remove

and it is planned to purchase another 183 cows by

pollutants;

• Mined areas underground are back filled;

• Noise and dust from operations at the Caijiaying

Mine are strictly controlled; and

• All non-recyclable wastes from supporting

facilities are treated in an incinerator.

June next year to complete the programme and

finalise a new industry for the local population.

Hebei Hua Ao has also assisted in the upgrade of

facilities at the local township school and set up

"Project Hope" to provide scholarships to local

students for ongoing study at primary, secondary

and tertiary levels. During 2013, Hebei Hua Ao

contributed over Rmb3 million ($490,000) to the

Griffin's environmental practices were rewarded

local community.

twice with Hebei Hua Ao being presented with the

Environmental Award at the 2010 China Mining

Conference

and

the Mine Development

Outstanding Achievement Award at the 2011 China

Mining Conference.

Hebei Hua Ao has provided direct water supplies

to the local villagers, constructed sealed roads to

the Caijiaying Mine and nearby villages, financed

the construction of a local kindergarten, an old

peoples rest home and assisted on other

infrastructure projects.

Griffin estimates that the Caijiaying Mine has

provided direct and indirect employment to over

1,000 Chinese nationals and minimised the

employment of expatriate personnel.

During 2013, Hebei Hua Ao paid Rmb 126.2

million ($20.7 million) in taxes, royalties, social

security fees, fines and other duties to Chinese

governmental authorities and agencies.

G R I F F I N M I N I N G L I M I T E D

R E P O RT A N D A C C O U N T S 2 0 13

Cows donated by Hebei Hua Ao for the establishment of sustainable cattle and dairy operations at Caijiaying

G R I F F I N M I N I N G L I M I T E D

FINANCIAL

Griffin Mining Limited (the ‘Company’) and its

• A record 838,431 tonnes of ore were processed,

subsidiaries (together the ‘Group’) recorded;

compared to 800,288 tonnes in 2012, a 4.8%

• Operating profit of $20,293,000 in 2013

increase;

(2012: $31,174,000);

• A record 11,468 ounces of gold in concentrate

• Profit before tax of $14,827,000 in 2013

(2012: $27,239,000);

were produced, compared to 8,322 ounces in

2012, a 37.8% increase;

• Profit after

tax of $9,756,000

in 2013

• 39,724 tonnes of zinc metal in concentrate were

(2012: $19,707,000); and

produced, compared to 40,581 tonnes in 2012;

• Profit after non-controlling

interests of

$8,157,000 in 2013 (2012: $14,835,000)

• 323,808 ounces of silver in concentrate were

produced, compared to 409,596 ounces in 2012;

Record amounts of ore were mined, hauled and

and

processed in 2013. With the upper mine levels

being mined to maximise the extractable amount of

ore, grades were lower resulting in lower zinc, lead

• 1,553 tonnes of lead in concentrate were

produced, compared to 2,402 tonnes in 2012.

and silver production in 2013. Gold grades and

In 2013, the average market price for zinc fell 2%

recoveries have improved such that record gold

from that in 2012. With increased treatment

production was achieved in 2013.

Revenues were further impacted by lower prices for

all metals. As a result revenues in 2013 fell to

$71,071,000 (2012: $76,860,000).

Whilst processing costs and administration costs

have been contained, mining and haulage costs

have risen with increased production and further

mine development. With lower revenues and

increased costs, profits from operations fell to

$20,293,000 in 2013 (2012: $31,174,000).

In summary, production in 2013 was as follows:

charges, the average price per tonne of zinc metal

in concentrate received by the Group in 2013 fell

by 5.2% to $1,302 (2012: $1,374). The average

price received for silver declined 26.3% to $16.8

per ounce (2012: $22.8), for lead by 12.0% to

$1,633 per tonne (2012: $1,855), and for gold by

17.7% to $1,233 per ounce (2012: $1,499).

Cost of sales have increased 15.2% in 2013 to

$40,078,000 (2012: $34,795,000). A significant

amount of this cost increase may be attributed to

increased amounts of ore being mined, hauled and

processed. Further cost increases resulted from

mine development with lower mine levels being

• A record 877,803 tonnes of ore were mined,

accessed and increased contractor rates for mining

compared to 789,692 tonnes in 2012, a 11.3%

and haulage.

increase;

R E P O RT A N D A C C O U N T S 2 0 13

Group operating costs in 2013 of $10,700,000 were

3,900,000 ordinary shares were issued on the

in line with that in 2012 of $10,891,000, despite

exercise of options by directors and management in

inflationary cost increases in China.

2013 bringing the number of Griffin shares on

Profits before tax declined to $14,827,000 (2012:

issue to 179,091,830.

$27,239,000) reflecting not only lower operating

Net cash inflow from operating activities in 2013

profits but also increased interest charges of

amounted to $27,997,000 (2012: $32,244,000).

$3,651,000 (2012: $3,414,000) arising from the new

$7,347,000 was

invested

in 2013,

(2012:

dry tailings facility at Caijiaying and the loss of

$125,419,000 including $117,459,000 to purchase

$2,229,000 on the disposal of Griffin’s interest in

the Chinese non controlling interests and extend

Spitfire Oil Limited at the end of 2013. The

the Hebei Hua Ao joint venture term).

Attributable net assets per share at 31st December

2013 was 84 cents (2012: 79 cents).

Group benefited from interest receipts of $145,000

(2012: $495,000), foreign exchange gains of

$107,000 (2012: losses of $904,000) and other

income of $162,000 (2012: $48,000).

Income taxes of $5,071,000 (2012: $7,532,000)

were charged. This includes a deferred taxation

provision of $297,000 (2012: nil).

The non controlling interests share of Hebei Hua

Ao's profits of $1,599,000 (2012: $4,872,000) were

provided, resulting in attributable profits to Griffin

of $8,157,000 (2012: $14,835,00). The reduction

in non controlling interests reflects not only a

reduction in profits but also a reduction in the non

controlling party’s equity interest from 40% to

11.2% with effect from the 25th June 2012.

Basic earnings per share in 2013 was 4.63 cents

(2012: 8.46 cents) with diluted earnings per share

of 4.63 cents in (2012: 8.36 cents).

During 2013, 260,000 (2012: 50,000) ordinary

shares were bought back in the market for

cancellation at a cost of $119,000 (2012: $24,000).

G R I F F I N M I N I N G L I M I T E D

R E P O RT A N D A C C O U N T S 2 0 13

Caijiaying Mine, Zinc concentrate stockpiles

G R I F F I N M I N I N G L I M I T E D

STRATEGIC REVIEW

CAIJIAYING

The latest JORC resource estimate confirms the

availability of extensive ore resources at Caijiaying

for increased production over an extended period.

With the extension of the term of the Hebei Hua

Ao joint venture to 2037, sufficient time now exists

to expand the current mining and processing

Development work has commenced to access the

Zone II area underground from both the

rehabilitation of the Fox decline and from the main

Zone III decline. This process is expected to be

completed by the end of 2014 and will provide

access to the zone II orebody and further resource

definition drilling areas.

capabilities at the Caijiaying Mine to provide the

It is hoped that throughput will slowly be expanded

maximum return on capital to shareholders.

towards the equivalent of 1.5 million tonnes of ore

Progress continues to be made by Hebei Hua Ao in

its application for a new mining licence at Zone II

and the area between Zone II and Zone III

together with all other associated permits to allow

per annum in 2015.

ACQUISITIONS

an expanded production profile to be instituted at

The Company's strategy is to continue to further

the Caijiaying Mine. Detailed plans have been

develop the Caijiaying Mine area and to further

completed and a lead contractor appointed for the

acquire low cost, base metals mining projects that

further upgrade of the processing facilities at

have the potential to be brought into long term,

Caijiaying to increase capacity to 1.5 million tonnes

economic production for a capital cost that

per annum. Tenders for the large capital machinery

provides a substantial and justifiable return on

with long lead times to delivery have been granted.

equity to shareholders.

Ground work for the upgrade has commenced with

Management efforts have been directed at

the foundation earthworks ceremony having taken

investigating potential ventures in China, Asia,

place with all appropriate Chinese government

Central Asia and elsewhere where management

officials present on the 8th of April 2014. All above

have extensive knowledge and contacts.

ground upgrade facilities are expected to be

completed by the 31st October 2014 to enable

winter work to continue. Additional plant and

equipment, including ball mill, floatation tanks and

a new power sub-station will need to be installed

during the summer months which will result in

significant interruption to production in July and

August of 2014.

A considerable number of projects and ventures

have been reviewed and investigated during the

past year, but none as yet have been successfully

consummated due to negative findings during due

diligence or an insufficient return calculated for the

risk shareholders would need to accept in funding

the project to production.

R E P O RT A N D A C C O U N T S 2 0 13

ZINC

Both of the above strategic directions pursued by

the Company are bolstered by the current outlook

for the world zinc price. In the third quarter of

2013, world demand for zinc exceeded supply. Zinc

stockpiles at the London Metals Exchange (the

‘LME’) along with warrants held over zinc metal at

the Shanghai Futures Exchange (SHFE) have fallen

since June 2013. Zinc metal stockpiles and on

warrant at the LME fell from 1.1Mt at the end of

June to 0.8Mt in April 2014. As this trend became

more evident a noticeable positive reaction has

LME. Barclays Plc forecast a price of $2,400 in a

26th March report. Zinc averaged $2,025 this year.

Use of the metal is expected to expand 4.5% to 13.6

million tons this year, while refinery output is

expected to increase 4.4% to 13.5 million tons, the

Zinc Study Group said in a 2nd April report.

Deutsche Bank AG sees a gap of 400,000 tons,

forecasting demand growth at 5.4%, up from 4%

last year. China is expected to use 7% more zinc

this year, according to Barclays. The nation now

accounts for 44% of the world total compared with

16% in 2000, the Zinc Study Group estimates.

been seen in the zinc price.

SPITFIRE OIL LIMITED

Production of refined zinc in China, India, Peru

and Korea has been strong in 2013 as growing

momentum

the global recovery drives

consumption in the world’s two largest economies,

China and the United States. On the supply side,

At the beginning of 2013, following a strategic

review of the Group's activities and future

direction, the directors determined that Griffin's

39.2% interest in Spitfire Oil Limited ("Spitfire")

was peripheral to the Group's activities and should

a limited number of new mines and a series of mine

be realised.

closures (e.g. Glencore Xstrata’s Perseverance and

Brunswick mines, Vedanta’s Lisheen operation and

MMG’s Century Zinc mine in Australia) are likely

to result in demand outstripping supply for a

substantial number of years. This bodes well for the

price of zinc and the profitability of zinc producers

in the future.

A number of prominent investment banks have

The original purchase of 16,666,667 ordinary shares

in Spitfire had been an opportunistic acquisition with

a view to diversifying the Group's activities.

Following Spitfire's decision to suspend development

of the Salmon Gums lignite deposits due to the

uneconomic nature of the estimated return on capital

outlayed, the Griffin directors concluded that

additional value could not be realised in the near

made predictions in respect of the zinc price.

term from Griffin's investment in Spitfire.

Morgan Stanley stated in an 8th of April report that

annual average cash prices on the LME may climb

13 percent to $2,331 in 2015 from $2,066 in 2014,

more than the other five industrial metals on the

On the 30th December 2013, Spitfire purchased

Griffin's total interest in Spitfire by acquiring

16,666,667 Spitfire shares for 5 pence per share.

G R I F F I N M I N I N G L I M I T E D

R E P O RT A N D A C C O U N T S 2 0 13

Mladen Ninkov (Chairman) with the Caijiaying management team and major contractors

G R I F F I N M I N I N G L I M I T E D

DIRECTORS

Mladen Ninkov, Chairman, Australian, aged 53,

involved in the resource industry for over 30 years. He

holds a Masters of Law Degree from Trinity Hall,

has been responsible for the discovery, development

Cambridge University and a Bachelor of Laws (with

and operation of several underground gold mines

Honours) and Bachelor of Jurisprudence Degree

during his career. Mr. Brynelsen is the President and

from the University of Western Australia. He is the

a director of Vangold Resources Limited.

principal of Keynes Capital. He has a mining, legal,

fund management and

investment banking

Rupert Crowe, Dirctor, Australian aged 64, is

background and is admitted as a barrister and

a graduate geologist from Trinity College Dublin.

solicitor of the Supreme Court of Western Australia.

He was the founding chairman and managing

He was the Chairman and Managing Director of the

director of CSA Global Pty Ltd, a mining

Dragon Capital Funds management group, a

consultancy company founded in Ireland in 1983

director and Head of International Corporate

and now headquartered in Australia. He is a

Finance at ANZ Grindlays Bank Plc in London and

specialist in zinc-lead exploration and was involved

a Vice President of Prudential-Bache Securities Inc.

as a principal in the discovery and development of

in New York. He also worked at Skadden Arps Slate

several notable mines. He has served on the board

Meagher & Flom in New York and Freehill

of four public companies listed in Dublin, London,

Hollingdale & Page in Australia. He has been

Vancouver and Australia. He is currently a non-

chairman and director of a number of both public

executive director of CSA Global Pty Ltd and

and private Mining and Oil & Gas companies.

Spitfire Oil Ltd.

Roger Goodwin, Finance Director, British,

Adam Usdan, Director, (appointed 19 March

aged 59, Finance Director, British, aged 59, is a

2014), USA, aged 52, is the President of Trellus

Chartered Accountant. He has been with the

Management Company LLC, an equity hedge fund

Company since 1996 having previously held senior

based in the U.S. Mr Usdan founded Trellus

positions in a number of public and private

Management in January 1994 and has been in the

companies within the natural resources sector. He

investment advisory industry for over 25 years. Mr

has a strong professional background, including

Usdan began his investment career in 1987 at

that as a manager with KPMG, with considerable

Odyssey Partners, where he was responsible for

public company and corporate finance experience,

managing long/short U.S. equity (small to mid-cap)

and experience of emerging markets.

pools of capital. Mr Usdan holds an MBA from the

Kellogg Graduate School of Management at

Dal Brynelsen, Director, Canadian, aged 67, is

Northwestern University with majors in Finance,

a graduate of the University of British Columbia in

Marketing, and Accounting, and a BA in English

Urban Land Economics. Mr. Brynelsen has been

from Wesleyan University.

R E P O RT A N D A C C O U N T S 2 0 13

SENIOR EXECUTIVES

Maoheng Zhang, Operations Manager

Dr Bo Zhou, General Manager China,

Caijiaying, Australian, aged 50, has a PhD in

Australian, aged 51, holds a PhD in exploration

mining engineering from the University of New

geology from Sydney University and a BSc in

South Wales. Dr Zhang has vast experience in

economic geology from Peking University. He was

operating numerous mining operations in Australia

Managing Director of Sinovus Mining Ltd, an

and Asia, including China, where he was the General

Australian Stock Exchange listed company with

Manager and Board Director of Guizhou Jinfeng

mineral interests in China. Prior to that, he was

Mining Limited for Sino Gold and then Eldorado

the General Manager for Guangxi Golden Tiger

Gold and Australia, where he was the mining

Mining JV, a Sino-Australian JV gold company

manager of the Darlot Gold Mine for Barrick Gold

focussed on Guangxi, China, controlled by Golden

of Australia. He also has extensive experience of

Tiger Mining NL. He has also worked as the

providing mining and engineering services to a

Senior Geologist for Silk Road Resources (a

number mines.

Toronto Stock Exchange

listed company)

responsible for evaluating various gold properties

Wendy Zhang, Chief Financial Officer Hebei

in Gansu Province in central western China. Dr

Hua Ao, Australian, aged 40, holds a Master of

Zhou has considerable experience of, and has

Accounting degree from Macquarie University, a

established extensive contacts in, the Chinese

member of the Certified Practising Accountant of

resources sector.

Australia and a qualified member of the Chinese

Institute of Certified Public Accountant for 11

years. Prior to joining Griffin she spent the

previous 4 years as Financial Controller for the

Australian Stock Exchange listed Golden Tiger

Mining’s joint venture operations in China.

Previously she was Chief Accountant for a

Shanghai Silk Group and subsequently Ann Taylor

Shanghai.

G R I F F I N M I N I N G L I M I T E D

DIRECTORS’ REPORT

The Directors submit their report together with the audited consolidated financial statements of Griffin Mining Limited ("the
Company") and its subsidiaries ("the Group") for the year ended 31st December 2013.

FINANCIAL RESULTS

The Group profit before taxation, amounted to US$14,827,000 (2012 US$27,239,000). Taxation of US$5,071,000 (2012
US$7,532,000) and non controlling interests of $1,599,000 (2012 $4,872,000) have been provided. No dividend was paid in
2013 (2012 nil). US$8,157,000 has been credited to reserves (2012 US$14,835,000).

The basic earnings per share amounted to 4.63 cents (2012 8.46 cents). The attributable net asset value per share at 31st
December 2013 amounted to 84 cents (2012 79 cents).

With cash flows from operations being used to fund the development of the Zone II deposit and the upgrade of the processing
facilities at Caijiaying and with any surplus cash flow directed to repaying existing Chinese banking facilities used to fund the
acquisition of additional equity in, and the extension of, the joint venture in 2012, the directors do not recommend the payment
of a dividend at this time.

PRINCIPAL ACTIVITIES

The principal activity of the Group is that of mining and exploration. A review of the Group's operations for the year ended
31st December 2013 and the indication of likely future developments are set out on pages 10 to 25.

DIRECTORS

The Directors of the Company during the year were:

Mladen Ninkov – Australian – Chairman
Roger Goodwin – British – Finance Director
Dal Brynelsen – Canadian
Rupert Crowe - Australian/ Irish - appointed 11th September 2013
William Mulligan - American (US) - resigned 31st December 2013

Adam Usdan was appointed a director on 19th March 2014.

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 beneficial interests of the Directors holding office at 31st December 2013 and their immediate families in the share capital
of the Company were as follows:

Name

At 31st December 2013

At 1st January 2013 or date of appointment

Ordinary
shares
number

Options over
ordinary shares,
number exercisable at
45 pence

Mladen Ninkov
Dal Brynelsen
Rupert Crowe
Roger Goodwin

33,001
215,001
1
877,830

6,000,000
400,000
-
1,200,000

All of the Directors’ interests detailed are beneficial.

Ordinary
shares
number

33,001
1
1
577,830

Options over
ordinary shares,
number exercisable at
20 pence

45 pence

6,000,000
400,000
-
1,200,000

3,000,000
200,000
-
600,000

The options exercisable at 45 pence per share entitle the holder to subscribe for new ordinary shares in the Company at an
exercise price of 45 pence per new ordinary share on or before 28th February 2015. The options have all now vested.

R E P O RT A N D A C C O U N T S 2 0 13

DIRECTORS’ REPORT

On 31st October 2013 options granted to the directors and management in October 2008 over 4,400,000 new ordinary shares
in the Company at an exercise price of 20p per share were exercised. The Company was informed by persons exercising options
over 500,000 of these shares that they intended to sell those ordinary shares. In order to maintain an orderly market in the
Company's shares, the Company agreed to buy out the options over these shares at the difference between the exercise price
and the mid market value of the Company's shares at close of business on 31st October 2013 of 34.5p.

The options were exercised by, and the new Ordinary shares issued as follows:

Number of
Options
held

Number of
Options
Exercised

Non Directors

3,000,000

Roger Goodwin (Director)

Dal Brynelsen (Director)

William Mulligan (Director)

Other management

600,000

200,000

400,000

600,000

200,000

400,000

Total

4,400,000

Number of
Options
bought out

300,000

200,000

500,000

Number of
shares
retained

3,000,000

300,000

200,000

3,900,000

On 13th February 2014 a new set of options (the "new options") over 5,000,000 new ordinary shares were granted to directors
and key employees of the Company in order to retain and incentivise key personnel with managerial and operating experience
in non-standard jurisdictions in a tight mining employment market.

Each option will entitle the holder to subscribe for new ordinary shares in the Company at an exercise price of £0.40 per share
on or before 31st December 2018. The options will not vest until 31st December 2014 with one third vesting then, followed by
one third on 31st December 2015 and one third on 31st December 2016.

The options will not vest if the option holder resigns or leaves the Company for cause prior to the vesting event taking place.
All the options will vest immediately upon; a takeover offer being made; or a change in control of the Company; or fundamental
change in the business of the Company taking place prior to the options expiring.

The options have been granted as follows:

Options over number

new ordinary shares in the Company

Directors:

Mladen Ninkov (Chairman)

Roger Goodwin (Finance Director)

Other management

Total

3,500,000

500,000

1,000,000

5,000,000

G R I F F I N M I N I N G L I M I T E D

DIRECTORS’ REPORT

REMUNERATION POLICY

The remuneration of all executive and non-executive directors, officers and senior employees of the Group is determined by the
board of directors.

The Company is committed to remunerating senior executives in a manner that is market-competitive and consistent with "Best
Practice" including the interests of shareholders. Remuneration packages are based on fixed and variable components,
determined by the executives' position, experience and performance, and may be satisfied via cash or equity.

Non-executive directors are remunerated at a level that is consistent with market and industry standards. The cash remuneration
of non-executive directors consists only of directors' fees and no retirement benefits are payable.

The Group's remuneration policy has been based on industry practice rather than Group performance and takes into account
the risk and liabilities assumed by the directors and executives as a result of their involvement in the speculative activities
undertaken by the Group. Directors and executives are fairly compensated for the extensive work they undertake.

No performance based bonuses were issued during the reporting year.

CORPORATE GOVERNANCE

Although incorporated in Bermuda and therefore not obliged to comply with the code of best practice established by the UK
Corporate Governance Code issued by the Financial Reporting Committee, 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. In particular, in view of the Company's size and the limited number of directors, the
Company has not formally established: an audit committee; a remuneration committee; and a nominations committee. However,
the non executive directors informally fulfil the roles and responsibilities normally expected of such committees.

The board of directors includes a number of non executive directors who, other than their shareholding, are considered to be
independent as their shareholdings are less than 0.2% of the Company's issued share capital and are 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. All directors
are subject to re-appointment annually at each annual general meeting of the Company's shareholders.

Various safeguards and checks have been instigated as part of the Company's system of financial control. These include:

• preparation of regular financial reports and management accounts

• preparation and review of capital and operational budgets

• preparation of regular operational reports

• prior approval of capital and other significant expenditure

•

regular review and assessment of foreign exchange risk and requirements

regular review of commodity prices and assessment of hedging requirements

AUDITOR

Grant Thornton UK LLP 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.

R E P O RT A N D A C C O U N T S 2 0 13

DIRECTORS’ REPORT

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS

Bermudan 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

• prepare the financial statements on a going concern basis unless it is inappropriate to presume the Company will continue

in business.

In so far as the directors are aware:

•

there is no relevant information of which the Company's auditors are unaware; and

the directors have taken all steps that they ought to have taken as directors to make themselves aware of relevant audit
information and to establish that the auditors are aware of that information.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the financial statements comply with the Bermuda Companies
Act 1981 as amended. 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.

The directors are responsible for the maintenance and integrity of the corporate and financial information included in the
Company's website. Legislation in Bermuda and the United Kingdom governing the preparation and dissemination of financial
statements may differ from the legislation in other jurisdictions.

This report was approved by the Board and signed on its behalf by:

Roger Goodwin

Finance Director and Company Secretary

12th May 2014

G R I F F I N M I N I N G L I M I T E D

REPORT OF THE INDEPENDENT AUDITOR

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GRIFFIN MINING LIMITED

We have audited the Group financial statements (the financial statements) of Griffin Mining Limited for the year ended 31st
December 2013 which comprise the consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of changes in equity, consolidated cash flow statement, the
accounting policies and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company’s members, as a body, in accordance with Section 90(2) of the Bermuda Companies
Act 1981. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR

As explained more fully in the Statement of Directors’ Responsibilities in respect of the accounts set out on page 33, the directors
are responsible for the preparation of the Group financial statements which give a true and fair view. Our responsibility is to
audit and express an opinion on the Group financial statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for
Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in the Chairman’s
statement, financial review, JORC Resource, Strategic Review and Directors report to identify material inconsistencies with
the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.

OPINION ON THE FINANCIAL STATEMENTS

In our opinion, the financial statements give a true and fair view of the state of the Group’s affairs as at 31st December 2013
and of its profit for the year then ended in accordance with IFRSs as adopted by the European Union.

Grant Thornton UK LLP
Statutory Auditor
London

12th May 2014

R E P O RT A N D A C C O U N T S 2 0 13

CONSOLIDATED INCOME STATEMENT

For the year ended 31st December 2013
(expressed in thousands US dollars)

Notes

2013
$000

2012
$000

Revenue

Cost of sales

Gross profit

Net operating expenses

Profit from operations

Share of losses of associated company
Loss on disposal of interest in associated company
Foreign exchange gains / (losses)
Finance income
Finance costs
Other income

Profit before tax

Income tax expense

Profit after tax

Attributable to non-controlling interests

Attributable to equity share owners of the parent

Basic earnings per share (cents)

Diluted earnings per share (cents)

4
5

6
7
8

71,071

76,860

(40,078)

(34,795)

30,993

42,065

(10,700)

(10,891)

20,293

-
(2,229)
107
145
(3,651)
162

14,827

(5,071)

9,756

1,599

8,157

9,756

4.63

31,174

(163)
-
(904)
495
(3,411)
48

27,239

(7,532)

19,707

4,872

14,835

19,707

8.46

8.36

G R I F F I N M I N I N G L I M I T E D

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st December 2013
(expressed in thousands US dollars)

Profit for the year

Other comprehensive income that will be reclassified to profit and loss

Exchange differences on translating foreign operations

Other comprehensive income for the period, net of tax

Total comprehensive income for the period

Attributable to non-controlling interests

Attributable to equity owners of the parent

2013
$000

9,756

841

10,597

1,683

8,914

10,597

2012
$000

19,707

545

20,252

4,960

15,292

20,252

R E P O RT A N D A C C O U N T S 2 0 13

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31st December 2013
(expressed in thousands US dollars)

Notes

ASSETS
Non-current assets
Property, plant and equipment
Intangible assets – Exploration interests
Investment in associated company

Current assets
Inventories
Receivables and other current assets
Cash and cash equivalents

Total assets

EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital
Share premium
Contributing surplus
Share based payments
Chinese statutory re-investment reserve
Other reserves on acquisition of non controlling interests
Foreign exchange reserve
Profit and loss reserve
Total equity attributable to equity holders of the parent

Non-controlling interests
Total equity

Non-current liabilities
Long-term provisions
Deferred taxation
Finance lease

Current liabilities
Taxation payable

Trade and other payables

Finance Lease

Bank loans
Total liabilities

12
13
14

15
16

20
21
22

2013

$000

193,444
1,852
-
195,296

7,981
4,214
26,278
38,473

2012
Restated
$000

177,470
1,707
3,596
182,773

6,231
4,168
16,764
27,163

233,769

209,936

1,791
71,339
3,690
2,748
1,683
(29,346)
11,212
84,614
147,731

3,004
150,735

2,591
1,646
12,012
16,249

2,878

14,215

487

49,205
66,785

1,755
70,037
3,690
3,055
1,313
(29,346)
10,485
76,797
137,786

4,757
142,543

2,535
1,316
-
3,851

3,840

12,590

47,112
63,542

Total equities and liabilities

233,769

209,936

Attributable net asset per share to equity holders of parent

$0.84

$0.79

The accounts on pages 35 to 60 were approved by the Board of Directors and signed on its behalf by:

Mladen Ninkov
Chairman

12th May 2014

Roger Goodwin
Finance Director

G R I F F I N M I N I N G L I M I T E D

l
a
t
o
T

y
t
i
u
q
E

-
n
o
N

l
a
t
o
T

g
n

i
l
l
o
r
t
n
o
C

e
l
b
a
t
u
b
i
r
t
t
a

s
t
s
e
r
e
t
n

s
r
e
d
l
o
h

y
t
i
u
q
e

o
t

t
n
e
r
a
p

f
o

s
t
s
e
r
e
t
n

g
n

i
l
l
o
r
t
n
o
c
-
n
o
n

t
i
f
o
r
P

s
s
o
l

d
n
a

e
v
r
e
s
e
R

n
g
i
e
r
o
F

e
v
r
e
s
e
R

e
g
n
a
h
c
x
E

f
o

n
o
i
t
i
s
i
u
q
c
a

e
v
r
e
s
e
r

s
t
n
e
m
y
a
p

r
e
h
t
O

n
o

e
v
r
e
s
e
r

e
s
e
n
h
C

t
n
e
m

t
s
e
v
n
i
-
e
r

e
r
a
h
S

d
e
s
a
b

g
n
i
t
u
b
i
r
t
n
o
C

e
r
a
h
S

s
u
l
p
r
u
s

m
u
m
e
r
p

l
a
t
i
p
a
C

3
1
0
2

r
e
b
m
e
c
e
D
1
3

d
e
d
n
e

r
a
e
y

e
h
t

r
o
F

)
s
r
a
l
l
o
d

S
U
s
d
n
a
s
u
o
h
t

d
e
s
s
e
r
p
x
e
(

Y
T
U
Q
E
N

S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
I
L
O
S
N
O
C

0
0
0
$

7
0
7
9
1

2
7
8
4

5
3
8
4
1

5
4
5

8
8

7
5
4

2
5
2
0
2

0
6
9
4

2
9
2
5
1

5
3
8
4
1

5
2

)
4
2
(

)
1
6
5
2
1
(

5
2

)
4
2
(

)
4
6
3
9
2
(

)
8
1
(

5
1
2
4
6
1

6
7
3
2
1

9
3
8
1
5
1

)
6
4
3
9
2
(

)
4
2
9
1
4
(

)
9
7
5
2
1
(

)
5
4
3
9
2
(

)
6
1
3
1
(

)
7
4
1
(

)
9
6
1
1
(

1
3
5
5
6
1

3
2
5
2
1

8
0
0
3
5
1

1
3
1
3
6

1
4
0
0
1

2
6
9
1
6

1
4
0
0
1

4
4
4

)
6
4
3
9
2
(

)
9
1
1
(

7
6
2
1

)
7
1
1
(

)
9
1
1
(

7
6
2
1

)
7
1
1
(

)
6
3
4
3
(

6
5
7
9

9
9
5
1

)
5
0
4
2
(

)
6
3
4
3
(

1
3
0
1

7
5
1
8

)
0
4
3
(

7
5
1
8

1
4
8

4
8

7
5
7

7
2
7

7
9
5
0
1

3
8
6
1

4
1
9
8

7
5
1
8

7
2
7

3
4
5
2
4
1

7
5
7
4

6
8
7
7
3
1

7
9
7
6
7

5
8
4
0
1

)
6
4
3
,
9
2
(

0
0
0
$

0
0
3
,
1

3
1

0
4
3

3
1
3
,
1

0
4
3

0
3

0
0
0
$

0
3
0
,
3

0
9
6
,
3

1
6
0
,
0
7

5
5
7
,
1

1
1
0
2

y
r
a
u
n
a
J

t
s
1

)
1
1

e
t
o
n
(

t
n
e
m

t
s
u
d
a

d
o
i
r
e
p

r
o
i
r
P

0
3
0
,
3

0
9
6
,
3

1
6
0
,
0
7

5
5
7
,
1

d
e
t
a
t
s
e
r

1
1
0
2

y
r
a
u
n
a
J

t
s
1

5
2

)
4
2
(

s
t
s
e
r
e
t
n
i

g
n
i
l
l
o
r
t
n
o
c

n
o
n

f
o

n
o
i
t
i
s
i
u
q
c
A

n
o
i
t
a
l
l
e
c
n
a
c

r
o
f

s
e
r
a
h
s

f
o
e
s
a
h
c
r
u
P

s
d
n
e
d
i
v
i
d

f
o

t
c
e
p
s
e
r

s
r
e
f
s
n
a
r
T

s
t
n
e
m
y
a
p

d
e
s
a
b

e
r
a
h
s

f
o

t
s
o
C

s
r
e
n
w
o

h
t
i

w
n
o
i
t
c
a
s
n
a
r
T

:
e
m
o
c
n
i

e
v
i
s
n
e
h
e
r
p
m
o
c

r
e
h
t
O

s
n
o
i
t
a
r
e
p
o

n
g
i
e
r
o
f

g
n

i
t
a
l
s
n
a
r
t

n
o

s
e
c
n
e
r
e
f
f
i
d

e
g
n
a
h
c
x
E

e
m
o
c
n
i

e
v
i
s
n
e
h
e
r
p
m
o
c

l
a
t
o
T

r
a
e
y

e
h
t

r
o
f

t
i
f
o
r
P

5
5
0
,
3

0
9
6
,
3

7
3
0
,
0
7

5
5
7
,
1

)
d
e
t
a
t
s
e
r
(

2
1
0
2

r
e
b
m
e
c
e
D

t
s
1
3

)
0
9
1
(

)
7
1
1
(

)
7
0
3
(

)
6
1
1
(

8
2
2
1

0
9
1

)
3
(

9
3

2
0
3
1

6
3

t
n
e
m

t
s
e
v
n
i

e
r
u
t
u
f

r
o
f

r
e
f
s
n
a
r
t

y
r
o
t
a
l
u
g
e
R

s
n
o
i
t
p
o

f
o

e
s
i
c
r
e
x
e

n
o

s
e
r
a
h
s

f
o

e
u
s
s
I

n
o
i
t
a
l
l
e
c
n
a
c

r
o
f

s
e
r
a
h
s

f
o

e
s
a
h
c
r
u
P

s
n
o
i
t
p
o

e
s
a
h
c
r
u
p

e
r
a
h
s

f
o

t
u
o

y
u
B

s
d
n
e
d
i
v
i
d

f
o

t
c
e
p
s
e
r

s
r
e
f
s
n
a
r
T

s
n
o
i
t
p
o

f
o

e
s
i
c
r
e
x
e

n
o

r
e
f
s
n
a
r
T

:
e
m
o
c
n
i

e
v
i
s
n
e
h
e
r
p
m
o
c

r
e
h
t
O

s
n
o
i
t
a
r
e
p
o

n
g
i
e
r
o
f

g
n

i
t
a
l
s
n
a
r
t

n
o

s
e
c
n
e
r
e
f
f
i
d

e
g
n
a
h
c
x
E

s
r
e
n
w
o

h
t
i

w
n
o
i
t
c
a
s
n
a
r
T

r
a
e
y

e
h
t

r
o
f

t
i
f
o
r
P

e
m
o
c
n
i

e
v
i
s
n
e
h
e
r
p
m
o
c

l
a
t
o
T

5
3
7
0
5
1

4
0
0
3

1
3
7
7
4
1

4
1
6
4
8

2
1
2
1
1

)
6
4
3
,
9
2
(

3
8
6
,
1

8
4
7
,
2

0
9
6
,
3

9
3
3
,
1
7

1
9
7
,
1

3
1
0
2

r
e
b
m
e
c
e
D

t
s
1
3

R E P O RT A N D A C C O U N T S 2 0 13

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31st December 2013
(expressed in thousands US dollars)

Notes

6
7
18
12

6
12
12
12
12
13

Net cash flows from operating activities
Profit before taxation
Share of associated company losses
Loss on disposal of interest in associated company
Foreign exchange (gains) / losses
Finance (income)
Finance costs
Adjustment in respect of share based payments
Depreciation, depletion and amortisation
(Increase) in inventories
Decrease / (increase) in receivables and other current assets
Increase / (decrease) in trade and other payables

Net cash inflow from operating activities

Taxation paid

Cash flows from investing activities
Interest received
Payments to extend joint venture term and acquire non controlling interests
Payments to acquire – mineral interests
Payments to acquire – plant and equipment
Payments to acquire – office equipment
Payments to acquire intangible fixed assets - exploration interests
Net cash (outflow) from investing activities

Cash flows from financing activities
Issue of ordinary share capital on exercise of options
Purchase of shares for cancellation
Interest paid
Finance Lease
Dividends paid to non controlling interests
Proceeds from bank loans
Repayment of bank loans
Net cash outflow from financing activities

Increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year
Effects of exchange rates
Cash and cash equivalents at the end of the year

Cash and cash equivalents comprise bank deposits
Bank deposits

2013
$000

14,827
-
2,229
(107)
(145)
3,651
-
7,184
(1,750)
563
1,545

27,997

2012
$000

27,239
163
-
904
(495)
3,411
25
6,762
(1,623)
(1,663)
(2,479)

32,244

(5,692)

(11,435)

145
-
(4,883)
(2,499)
-
(110)
(7,347)

1,150
(119)
(3,651)
(354)
(3,436)
15,508
(13,415)
(4,317)

10,641

16,764
(1,127)
26,278

495
(117,459)
(4,206)
(4,129)
(3)
(117)
(125,419)

-
(24)
(3,411)
-
(12,561)
47,112
-
31,116

(73,494)

91,089
(831)
16,764

26,278

16,764

Included within net cash flows of $10,641,000 (2012 $73,494,000) are foreign exchange gains of $107,000 (2012 losses $904,000)
which have been treated as realised.

G R I F F I N M I N I N G L I M I T E D

ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The accounts have been prepared in accordance with applicable International Financial Reporting Standards as issued by the
International Accounting Standards Board and as adopted by the European Union. The significant accounting policies
adopted are detailed below:

ACCOUNTING CONVENTION

The accounts have been prepared under the historical cost convention, except for certain financial assets which are measured
at fair value.

CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

(a) New and amended standards adopted by the Group

International Financial Reporting Standard ("IFRS") 13 became effective on 1st January 2013. IFRS 13 Fair Value
Measurement does not affect which items are required to be fair-valued, but clarifies the definition of fair value and
provides related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods
beginning on or after 1 January 2013. The Group's management does not consider that this has a significant impact on
the Group.

Amendments to IAS 1 Presentation of Financial Statements (IAS 1 Amendments). The IAS 1 Amendments require an
entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will
not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific
conditions are met. It is applicable for annual periods beginning on or after 1st July 2012.

There were no other International Financial Reporting Standards ("IFRSs") or International Reporting Interpretations
Committee ("IFRIC") interpretations that are effective for the first time for the financial year beginning on or after 1st
January 2013 that are expected to have a material impact on the Group.

(b) At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing
standards have been published by the International Accounting Standards Board ("IASB") but are not yet effective, and
have not been adopted early by the Group.

Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the
first period beginning after the effective date of the pronouncement. Information on new standards, amendments and
interpretations that are expected to be relevant to the Group's financial statements is provided below. Certain other new
standards and interpretations have been issued but are not expected to have a material impact on the Group's financial
statements.

IFRS 9 Financial Instruments. The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement
in its entirety. IFRS 9 is being issued in phases. To date, the chapters dealing with recognition, classification,
measurement and de-recognition of financial assets and liabilities have been issued. These chapters are effective for
annual periods beginning 1 January 2015, however this has yet to be adopted by the European Union. Further chapters
dealing with impairment methodology and hedge accounting are still being developed. The Group's management have
yet to assess the impact of this new standard on the Group's consolidated financial statements. However, they do not
expect to implement IFRS 9 until all of its chapters have been published and they can comprehensively assess the impact
of all changes.

2. Consolidation Standards. A package of consolidation standards are effective for annual periods beginning on or after
1st January 2014. Information on these new standards is presented below. The Group's management have yet to assess
the impact of these new and revised standards on the Group's consolidated financial statements.

IFRS 10 Consolidated Financial Statements (IFRS 10). IFRS 10 supersedes IAS 27 Consolidated and Separate
Financial Statements (IAS 27) and SIC 12 Consolidation - Special Purpose Entities. It revised the definition of
control together with accompanying guidance to identify an interest in a subsidiary. However, the requirements
and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain
the same.

R E P O RT A N D A C C O U N T S 2 0 13

ACCOUNTING POLICIES

IFRS 12 Disclosure of Interests in Other Entities (IFRS 12). IFRS 12 integrates and makes consistent the disclosure
requirements for various types of investments, including unconsolidated structured entities. It introduces new
disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities.

III Consequential amendments to IAS 27 and IAS 28 Investments in Associates and Joint Ventures (IAS 28). IAS 27 now
only deals with separate financial statements. IAS 28 brings investments in joint ventures into its scope. However,
IAS 28's equity accounting methodology remains unchanged.

As far as can be determined, the directors anticipate that the adoption of these Standards and Interpretations in future periods
will have no material impact on the financial statements of the Group. The Group does not intend to apply any of these
pronouncements early. Management have not assessed the impact of IFRS12 which will only be on disclosure, in respect of
non controlling interests.

GOING CONCERN

The financial statements have been prepared on a going concern basis. As at 31st December 2013, Hebei Hua Ao (a subsidiary
of the Company) had bank loans outstanding of $49,205,000. Having previously rolled over each of the bank facilities Hebei
Hua Ao expects to roll over the existing facilities for a further 12 months. Having considered the cash resources, banking facilities
and forecasts for the remainder of the Hebei Hua Ao joint venture term, the directors do not expect any going concern issues
to arise.

CONSOLIDATION BASIS

The Group accounts consolidate the accounts of the Company and all its subsidiary undertakings drawn up to 31st December
each year. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to
obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements
of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the acquisition method. The acquisition method involves the recognition at fair
value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless
of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition,
the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values, which
are also used as the bases for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated
after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the
Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Acquisition costs are expensed
as incurred.

Non controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is
not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the
parent and the non-controlling interests based upon their respective ownership interests.

ASSOCIATES

Associates are those entities over which the Group has significant influence but which are neither subsidiaries nor interests in
joint ventures. Investments in associates are recognised initially at cost and subsequently accounted for using the equity method.
Acquired investments in associates are also subject to purchase method accounting. However, any goodwill or fair value
adjustment attributable to the Group's share in the associate is included in the amount recognised as investment in associates.

All subsequent changes to the Group's share of interest in the equity of the associate are recognised in the Group's carrying
amount of the investment. Changes resulting from the profit or loss generated by the associate are reported in "share of profits
of associates" in profit or loss and therefore affect net results of the Group. These changes include subsequent depreciation,
amortisation or impairment of the fair value adjustments of assets and liabilities.

G R I F F I N M I N I N G L I M I T E D

ACCOUNTING POLICIES

Items that have been recognised directly in other comprehensive income of the associate are recognised in other comprehensive
income of the Group. However, when the Group's share of losses in an associate equals or exceeds its interest in the associate,
including any unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associate. If the associate subsequently reports profits, the investor resumes recognising its share of
those profits only after its share of the profits equals the share of losses not recognised.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Amounts reported in the financial statements of associates have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.

REVENUE

Revenue is measured by reference to the fair value of consideration received or receivable by the Group and comprises amounts
received, net of VAT and production royalties, from sales of metal concentrates to third party customers. Sales are made on a
cash on delivery / collection basis and are recognised on collection or delivery of the concentrate from the Group's processing
facilities.

NON CURRENT ASSETS

Intangible assets – exploration cost
Expenditure on licences, concessions and exploration incurred on areas of interest by subsidiary undertakings are carried as
intangible assets until such time as it is determined that there are both technically feasible and commercially viable reserves within
each area of interest and the necessary finance in place, at which time such costs are transferred to property, plant and equipment
to be amortised over the expected productive life of the asset. The Group's intangible assets are subject to periodic review at
least annually by the directors for impairment. Exploration, appraisal and development costs incurred in respect of each area of
interest which are determined as unsuccessful are written off to the income statement.

Property, plant and equipment
Mine development expenditure for the initial establishment of access to mineral reserves, together with capitalised exploration,
evaluation and commissioning expenditure, and costs directly attributable to bringing the mine into commercial production are
capitalised to the extent that the expenditure results in significant future benefits.

Property, plant and equipment are shown at cost less depreciation and provisions for the impairment of value (see note 12).

Residual values
Material residual value estimates are updated as required, but at least annually whether or not the asset is re-valued.

Depreciation
On 21st May 2012 the term of Hebei Hua Ao's joint venture business licence was extended to 12th October 2037 effective
from 25th June 2012. The pre existing business licence terminated in 2019. Prior to 25th June 2012 all costs capitalised (mineral
interests, mill and mine equipment) within an area of interest, were amortised over the current estimated economic reserve of
the area of interest on a unit of production basis.

In view of the extension of Hebei Hua Ao's business licence, thereby increasing the term of the joint venture, the economic lives
of all non current tangible assets have been reassessed and depreciation rates have been revised with effect from 25th June 2012
to reflect the increased term of operations, extractable resource, and economic lives of the assets as follows:

1. Mine acquisition, development, licence, pre production and land use rights - on a unit of production

2. Plant and buildings - over 25 years on a straight line basis with a 10% residual value

3. Dry tailings facility held under finance lease- over 15 years on a straight line basis with no residual value

4. Mechanical equipment - over 10 years on a straight line basis with a 10% residual value

5. All other equipment, including vehicles - over 5 years on a straight line basis with a 10% residual value

R E P O RT A N D A C C O U N T S 2 0 13

ACCOUNTING POLICIES

Impairment

A review for impairment indicators at each reporting date is undertaken. In the event of impairment indicators being identified,
an impairment test is carried out to assess whether the net book value of the capitalised costs in each area of interest is covered
by the discounted future cash flows from reserves within that area of interest. Any deficiency arising is provided for to the extent
that, in the opinion of the directors, it is considered to represent a permanent diminution in value of the related asset, and where
arising, is dealt with in the income statement as additional depreciation.

Impairment assessments are based upon a range of estimates and assumptions:

ESTIMATE / ASSUMPTION BASIS

Future production
Commodity prices
Exchange rates
Discount rates

Proven and probable reserves and resource estimates together with processing capacity
Forward market and longer term price estimates
Current market exchange rates
Cost of capital risk

MINE CLOSURE COSTS

Mining operations are generally required to restore mine and processing sites at the end of their lives to a condition acceptable
to the relevant authorities and consistent with the Group's environmental policies. Whilst the Group strives to maintain and
where possible enhance the environment of the Group's processing sites, provision is made for site restoration costs in the
accounts in accordance with local requirements.

INVENTORIES

Inventories are valued at the lower of cost or net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

•

Consumable stores and spares, at purchase costs on a first in first out basis

Concentrate stockpiles at cost of direct materials, power, labour, and a proportion of site overhead

Ore stockpiles at cost of direct material, power, labour contractor charges and a proportion of site overhead

FINANCIAL ASSETS

Financial assets held by the Group are loans and receivables.

Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument
and its purpose. A financial instrument's category is relevant for the way it is measured and whether resulting income and expenses
are recognised in profit or loss or in other comprehensive income.

Financial assets are reviewed by management individually and an assessment of whether a financial asset is impaired is made at
least at each reporting date. All income and expense relating to financial assets are recognised in the income statement line
item "finance costs" or "finance income" respectively.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are classified as current assets or non-current assets based on their maturity date. Loans and receivables are classified
as either 'trade and other receivables', ‘cash’, or 'other financial assets' in the statement of financial position. On initial recognition
loans and receivables are recognised at fair value plus transaction costs. They are subsequently measured at amortised cost
using the effective interest method, less provision for impairment. Any change in their value is recognised in profit or loss. The
Group's other receivables fall into this category of financial instruments.

FINANCIAL LIABILITIES

The Group's financial liabilities include bank loans, trade and other payables, which are measured at amortised cost using the
effective interest rate method. On initial recognition financial liabilities are recognised at fair value net of transaction costs.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest
related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included in the
income statement line items "finance costs" or "finance income".

G R I F F I N M I N I N G L I M I T E D

ACCOUNTING POLICIES

FOREIGN CURRENCY TRANSACTIONS

The accounts have been prepared in United States dollars being the local currency of Bermuda. Whilst registered in Bermuda
the Company, together with its subsidiaries and associates, operate in China, the United Kingdom, and Australia. The functional
and presentation currency of the parent is US dollars.

Foreign currency transactions by Group companies are recorded in their functional currencies at the exchange rate ruling at the
date of the transaction.

Monetary assets and liabilities have been translated at rates in effect at the statement of financial position date. Any realised or
unrealised exchange adjustments have been charged or credited to profit or loss. Non-monetary items measured at historical
cost are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value are
translated using the exchange rates at the date when the fair value was determined.

On consolidation the accounts of overseas subsidiary undertakings are translated into the presentation currency of the Group
at the rate of exchange ruling at the reporting date and income statement items are translated at the average rate for the year.
The exchange difference arising on the retranslation of opening net assets is recognised in other comprehensive income and
accumulated in the foreign exchange reserve. All other translation differences are taken to profit or loss.

The balance of the foreign currency translation reserve relating to an operation that is disposed of is reclassified from equity to
profit or loss at the time of the disposal.

EQUITY

Equity comprises the following:

•

"Share capital" represents the nominal value of equity shares.

"Share premium" represents the excess over nominal value of the fair value of consideration received for equity
shares, net of expenses of the share issue.

"Contributing surplus" is a statutory reserve for the maintenance of capital under Bermuda company law and was
created on a reduction in the par value of the Company's ordinary shares on 15th March 2001.

"Share based payments" represents equity-settled share-based remuneration until such share options are
exercised.

"Foreign exchange reserve" represents the differences arising from translation of investments in overseas
subsidiaries.

"Chinese statutory re-investment reserve" represents a statutory retained earnings reserve under PRC law for
future investment by Hebei Hua-Ao.

"Other reserves on acquisition of non controlling interests" represents the excess of the purchase price paid to
acquire non controlling interest rights over the non controlling interests in subsidiary companies.

"Profit and loss reserve" represents retained profits and losses.

EQUITY SETTLED SHARE BASED PAYMENTS

All goods and services received in exchange for the grant of any share-based remuneration are measured at their fair values.
Fair values of services are indirectly determined by reference to the fair value of the share options awarded. Their value is
appraised at the grant date and excludes the impact of non-market vesting conditions (for example, production upgrades).

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to "Share based
payments" in the statement of financial position.

If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the
best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior
to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options
ultimately exercised are different to that estimated on vesting.

Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital.

For the financial year ended 31st December 2013 the total expense recognised in profit or loss arising from share based
transactions was $Nil (2012: $25,000).

R E P O RT A N D A C C O U N T S 2 0 13

ACCOUNTING POLICIES

SIGNIFICANT JUDGEMENTS AND ESTIMATES

In formulating accounting policies the directors are required to apply their judgement, and where necessary engage professional
advisors, with regard to the following significant areas:

•

Impairment review assumptions, property, plant and equipment (note 12). Impairments are assessed by
comparison of the cash generating unit (the Caijiaying Mine) carrying amounts against the value of future
discounted cash flows expected to be derived from this unit. The value of the cash flows are estimated by direct
reference to the current prevailing value of the commodities extracted. Based on current production and costs
the directors have determined that the future profitability of the Group requires the market price of zinc to
remain above $1,300 per tonne with gold, silver and lead prices remaining at current prevailing levels.

Impairment review assumptions, exploration interests (note 13). Impairments are assessed by reference to
exploration results carried out in an area of interest. Where such exploration indicates that there are no
indications of mineralisation within the area of interest, provision is made for impairment in value.

Provision for mine closure costs (note 20) have been made in accordance with the rules and regulations of the
Peoples Republic of China at a rate of Rmb0.5 per tonne of estimated resources. The expected amount of
resource due to be extracted during the life of the mine is based on estimated rates of extraction which take into
account reported measured, indicated and inferred levels of resource, the term of the Hebei Hua Ao joint venture
and current capability of the extractive machinery currently in use at the mine.

Determination that investments in associates are not subsidiaries (note 14). Mladen Ninkov, Roger Goodwin and
Rupert Crowe, who was appointed a director of Griffin on 11th September 2013, are non-executive directors of
Spitfire Oil Ltd, resulting in Griffin gaining effective control of Spitfire from 11th September 2013. At the
beginning of 2013 the directors of Griffin resolved to dispose of Griffin's interest in Spitfire Oil Limited and on
30th December 2013 Spitfire Oil Limited bought back Griffin's equity interest in Spitfire Oil Ltd. The results
of Spitfire Oil Limited from date of effective control to date of disposal of Griffin's interest are not considered
material to the Group requiring consolidation of Spitfire Oil Limited's results for the period.

The division of the purchase consideration for the non controlling interests and the extension of the Hebei Hua
Ao joint venture period (note 12) has been determined from forecast discounted future cash flows from Caijiaying
assuming current metal prices, costs, extraction and processing rates.

The determination of the value of Finance Leased Asset, and attributable Finance Lease Interest is assessed from
future expected utilisation of the asset, assuming half of all tailings will be treated by the asset and the Group’s
inherent rate of interest on bank loans in China.

The directors continually monitor the basis on which their judgements are formulated. Where required they will make
amendments to these judgements. Where judgements and estimates are amended between accounting periods, full disclosure of
the financial implications are given within the relevant notes to the Group accounts.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

DIVIDENDS

Dividend distributions payable to equity shareholders are included in "other short term financial liabilities" when the dividends
are approved in a directors meeting prior to the reporting date.

G R I F F I N M I N I N G L I M I T E D

ACCOUNTING POLICIES

TAXATION

Current tax is the tax currently payable based on taxable profit for the year.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided
on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided
on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in
subsidiaries, associates and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group
and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as
well as other income tax credits to the group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable
that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred
tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided
they are enacted or substantively enacted at the reporting date.

Changes in deferred tax assets or liabilities are recognised as a component of the tax expense in the income statement, except
where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) in which case the
related deferred tax is also charged or credited directly to other comprehensive income or equity.

SEGMENTAL REPORTING

In identifying its operating segments, management generally follows the Group's service lines, which represent the main
products produced by the Group. Management consider there to be only one operating segment being the operations at the
Caijiaying Mine based in China with production of zinc concentrate, and lead concentrate with associated precious metals
credits. All activities of the Group are reported through management and the executive directors to the Board of directors of
the Company. The measurement policies the Group uses for Segment reporting under IFRS 8 are the same as those used in its
financial statements.

Corporate assets which are not directly attributable to the business activities of Caijiaying Mine are not allocated to the Chinese
segment but are reviewed in light of operating expenses by the region in which they occur. In the financial periods under review,
this primarily applies to the Group's head office and intermediary holding companies within the Group.

There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.

LEASED ASSETS

Finance leases

The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of
ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is recognised at the
inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental
payments, if any. A corresponding amount is recognised as a finance lease liability.

See accounting policy on non-current assets and depreciation and note 12 for the depreciation methods and useful lives for assets
held under finance leases. The interest element of lease payments is charged to profit or loss, as finance costs over the period of
the lease.

R E P O RT A N D A C C O U N T S 2 0 13

NOTES TO THE FINANCIAL STATEMENTS

1. SEGMENTAL REPORTING

The Group has one business segment, the Caijiaying zinc gold mine in the People's Republic of China. All sales and costs of
sales in 2013 and 2012 were derived from the Caijiaying zinc gold mine.

REVENUES
China

Zinc concentrate
Lead concentrate with gold and silver credits

COST OF SALES
China

NET OPERATING EXPENSES
China
Australia
European Union

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

TOTAL ASSETS
China
Australia
European Union

CAPITAL EXPENDITURE
China
European Union

China - acquisition of non-controlling interests

2. PROFIT FROM OPERATIONS

Profit from operations is stated after charging:

Staff costs
Fair values of options granted to directors and management

Average number of persons employed by the Group in the year

2013
$000

227,337
633
5,799
233,769

7,492
-
7,492

-
7,492

2013
$000

(3,796)
-

No.
368

2013
$000

71,071

50,141
20,930
71,071

2012
$000

76,860

52,047
24,813
76,860

(40,078)

(34,795)

(7,374)
(44)
(3,282)
(10,700)

(7,539)
(163)
(3,189)
(10,891)

2012
$000

202,016
4,376
3,544
209,936

96,546
3
96,549

29,365
125,914

2012
$000

(4,929)
(25)

No.
367

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

3. DIRECTORS’ AND KEY MANAGEMENT PERSONNEL REMUNERATION

The following fees and remuneration were receivable by the Directors holding office and key personnel engaged during the
year:

Fees

Salary

Share Total
Pension
2013
& Social
based
Security payments

Fees

Salary

Share Total
Pension
& Social
based
2012
Security payments

Mladen Ninkov *
Dal Brynelsen
Rupert Crowe**
Roger Goodwin
William Mulligan

Key personnel

$000

114
202
28
114
87
545
-
545

-
-
-
473
-
473
1,271
1,744

costs

$000

-
-
-
129
-
129
-
129

$000

-
-

-
-
-
-
-

114
202
28
716
87
1,147
1,271
2,418

112
154
-
112
88
466
-
466

-
-
-
445
-
445
775
1,220

costs

$000

-
-
-
108
-
108
-
108

$000

15
1
-
3
1
20
5
25

127
155
-
668
89
1,039
780
1,819

Rupert Crowe was appointed on 11th September 2013 and William Mulligan resigned on 31st December 2013.

*Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received
fees under a consultancy agreement of $1,864,000 (2012 $1,692,000), for the provision of advisory and support services to Griffin
Mining Limited and its subsidiaries during the year Mladen Ninkov is a director and employee of Keynes Investments Pty
Limited.

**CSA Global Pty Ltd (“CSA Global”) provides exploration services to the Group. Rupert Crowe is a director and shareholder
of CSA Global Pty Ltd. CSA Global received fees of $153,746 in relation to services performed for the Group.

On 31st October 2013 options granted to the directors and management in October 2008 over 4,400,000 new ordinary shares
in the Company at an exercise price of 20p per share were exercised.

The Company was informed by persons exercising options over 500,000 of these shares that they intended to sell those ordinary
shares. In order to maintain an orderly market in the Company's shares, the Company agreed to buy out the options over these
shares at the difference between the exercise price and the mid market value of the Company's shares at close of business on 31st
October 2013 of 34.5p.

The Options were exercised by, and the new ordinary shares issued as follows:

Number of Options
held

Number of Options Number of Options
bought out

Exercised

Number of Shares
retained

Non Directors

3,000,000

Roger Goodwin (Director)

Dal Brynelsen (Director)

William Mulligan (Director)

Other management

Total

600,000

200,000

400,000

600,000

200,000

400,000

4,400,000

No share options were exercised by the directors in 2012

300,000

200,000

500,000

3,000,000

300,000

200,000

3,900,000

R E P O RT A N D A C C O U N T S 2 0 13

NOTES TO THE FINANCIAL STATEMENTS

4. SHARE OF LOSSES OF ASSOCIATED COMPANY

Share of losses of Spitfire Oil Ltd

2013
$000
-

2012
$000
163

In January 2013 the directors of the Company determined to dispose of Griffin's 39.2% interest in the issued share capital of
Spitfire Oil Limited ("Spitfire"). On 30th December 2013 Spitfire purchased Griffin's interest in 16,666,667 Spitfire shares for
5 UK pence per share.

Rupert Crowe, a director of Spitfire, was appointed a director of the Company on 11th September 2013 which, with Mladen
Ninkov and Roger Goodwin both serving as directors of Griffin and Spitfire, gave Griffin effective control of Spitfire. The
results of Spitfire from the date of effective control on 11th September 2013 to date of disposal on 30th December 2013 are not
considered material to the Group requiring consolidation of Spitfire's results in that period. Griffin’s share of the financial losses
in 2013 to date of disposal were $79,000.

Summarised financial information on Spitfire Oil Limited

Loss before income tax

Six months to
31st December 2013
Unaudited
$000
112

Year to
30th June 2013
Audited
$000
277

5. LOSS ON DISPOSAL OF INTEREST IN ASSOCIATED COMPANY

Loss on disposal of 39.2% interest in Spitfire Oil Limited

6. FINANCE INCOME

Interest on bank deposits

7. FINANCE COSTS

Interest payable on short term bank loans
Finance lease interest

8. OTHER INCOME

Scrap and sundry other sales

2013
$000

2,229

2013
$000
145

2013
$000
3,297
354
3,651

2013
$000
162

2012
$000

2012
$000
495

2012
$000
3,411
-
3,411

2012
$000
48

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

9. INCOME TAX EXPENSE

Profit for the year before tax

Expected tax expense at a standard rate of PRC income tax of 25% (2012 25%)

Adjustment for tax exempt items:
- Income and expenses outside the PRC not subject to tax
- Share of associated company losses

Adjustments for temporary differences:
- Other

Adjustments for short term temporary differences:
- In respect of accounting differences
- Other

Withholding tax on intercompany dividends and charges
Current taxation expense

Deferred taxation expense
Origination and reversal of temporary differences

Total tax expense

2013
$000
14,827

3,707

1,042
-

2012
$000
27,239

6,810

(1,796)
41

256

(589)
167

354
4,774

297
297

5,071

(109)
112

2,218
7,532

-
-

7,532

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 2013 (25% in 2012) based upon the profits calculated under Chinese generally accepted accounting principals
(Chinese "GAAP").

10. EARNINGS PER SHARE

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

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

2013

Earnings

$000

Weighted
average
number of
shares

Per
share
amount
(cents)

Earnings

$000

2012

Weighted
average
number
of shares

Per
share
amount
(cents)

8,157

176,015,707

4.63

14,835

175,456,077

8.46

Basic earnings per share
Earnings attributable to
ordinary shareholders

Dilutive effect of securities

Options

Diluted earnings per share

8,157

176,015,707

4.63

2,021,897

14,835

177,477,974

8.36

R E P O RT A N D A C C O U N T S 2 0 13

NOTES TO THE FINANCIAL STATEMENTS

11. PRIOR PERIOD ADJUSTMENT

$1,316,000 has been charged to profit and loss reserve, and deferred taxation in respect of financial periods to 31st December
2010. A third statement of financial position has not been presented as this does not impact the profits or losses for the years ended
31st December 2011 or 2012, and the impact of this is reflected in the statement of changes in equity and in note 21. The
Statement of Financial Position at 31st December 2012 has been restated to reflect this. This charge relates to deferred taxation
at 25% on accelerated depreciation for Chinese tax purposes during which time Hebei Hua Ao enjoyed advantageous tax rates
in the PRC tax.

12. PROPERTY, PLANT AND EQUIPMENT

At 1st January 2012
Foreign exchange adjustments
Additions during the year
Additions re extensions of joint venture period
Rehabilitation provision
Depreciation charge for the year
At 31st December 2012
Foreign exchange adjustments
Additions during the year
Additions under finance lease
Transfer rehabilitation deposit
Depreciation charge for the year
At 31st December 2013

At 31st December 2011

Cost

Accumulated depreciation
Net carrying amount

At 31st December 2012

Cost
Accumulated depreciation
Net carrying amount

At 31st December 2013

Cost
Accumulated depreciation
Net carrying amount

Mineral
interests

$000

63,845
639
4,206
88,094
1,647
(3,817)
154,614
1,494
4,883
-
758
(4,397)
157,352

72,652

(8,807)
63,845

167,405
(12,791)
154,614

174,810
(17,458)
157,352

Mill and
mobile mine
equipment
$000

Office furniture
and equipment

Total

$000

21,429
223
4,129
-
-
(2,934)
22,847
645
2,499
12,879
-
(2,782)
36,088

29,463

(8,034)
21,429

33,910
(11,063)
22,847

50,209
(14,121)
36,088

17
-
3
-
-
(11)
9
-
-
-
-
(5)
4

(69)
17

86
(77)
9

86
(82)
4

85,291
862
8,338
88,094
1,647
(6,762)
177,470
2,139
7,382
12,879
758
(7,184)
193,444

102,201

(16,910)
85,291

201,401
(23,931)
177,470

225,105
(31,661)
193,444

Mineral interests comprise the Group's interest in the Caijiaying ore bodies including cost 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.

At 31st December 2013 and 2012 there were no indications of impairment in the net book values of the capitalised cost.

The office furniture and equipment disclosed above relates solely to the fixed assets of the Company and China Zinc Pty Ltd.

During 2013 plant and equipment with a deemed value of $12,879,000 were acquired under a finance lease, upon which
depreciation of $429,000 has been provided. At 31st December 2013 the net carrying amount of this equipment was $12,451,000.

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

12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

On 25th June 2012 China Zinc Limited acquired a further 28.8% of the existing joint venture partner's interest in Hebei Hua
Ao, and with effect from 21st May 2012 the term of the joint venture's business licence extended to 12th October 2037, by the
outlay of $117,459,000. 75% of this amount has been attributed to the extension of the joint venture term and capitalised to
non-current tangible assets and 25% attributed to buying out the minority interests and charged directly to reserves within other
reserves on acquisition of non controlling interests. The allocation has been based upon estimated future discounted cash flows
from the Caijiaying mine.

In view of the extension of Hebei Hua Ao's business licence, thereby increasing the term of the joint venture, the rehabilitation
provision and depreciation rates have been revised with effect from 25th June 2012 to reflect the increased term of operations,
extractable resource, and economic lives of the assets.

13. INTANGIBLE ASSETS

China – Zinc / gold exploration interests
At 1st January 2012
Foreign exchange adjustments
Additions during the year
At 31st December 2012
Foreign exchange adjustments
Additions during the year
At 31st December 2013

$000
1,573
17
117
1,707
35
110
1,852

Intangible assets represent cost on acquisition, plus subsequent expenditure on licences, concessions, exploration, appraisal and
development work. 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 31st December 2013 no
amounts had been provided or charged to the income statement in respect of the above exploration costs (2012 - nil).

14. INVESTMENT IN ASSOCIATED COMPANY

At 1st January
Share of losses of Spitfire Oil Limited
Transfer on sale (note 5)
At 31st December

2013
$000

3,596
-
(3,596)
-

2012
$000

3,759
(163)
-
3,596

Griffin acquired 16,666,667 ordinary shares in Spitfire Oil Limited ("Spitfire"), representing a 39.2% interest in the issued share
capital of Spitfire, at UK 15p per share for a total cash consideration of £2,500,000 ($4,542,000) on 27th November 2008.

In January 2013 the directors of the Company determined to dispose of Griffin 39.2% interest in the issued share capital of
Spitfire. On 30th December 2013 Spitfire purchased Griffin's interest in 16,666,667 Spitfire shares for UK 5p per share
equating to $1,367,000. See note 5.

NOTES TO THE FINANCIAL STATEMENTS

R E P O RT A N D A C C O U N T S 2 0 13

15. INVENTORIES

Underground ore stocks
Surface ore stocks
Concentrate ore stocks
Spare parts and consumables

2013
$000
1,550
4,489
1
1,941

7,981

All inventories are expected to be sold, used or consumed within one year of the reporting date.

16. RECEIVABLES AND OTHER CURRENT ASSETS

Receivables
Amounts due on disposal of interest in Spitfire Oil Ltd (Note 14)
Advance to Zhangjiakou Guoxin Enterprise Management and Service Center
Other Receivables
Prepayments

2013
$000
258
1,367
1,431
253
905
4,214

2012
$000
1,546
1,757
926
2,002

6,231

2012
$000
1,906
-
-
904
1,358
4,168

Sales of metals in concentrate are made by way of open auction in China to Chinese smelters and agents.

During the year Rmb2,913,000 ($472,000) (2012 Rmb3,000,000 ($527,000)) was incurred in service charges with Zhangjiakou
Guoxin Enterprise Management and Service Center (formerly the Zhangjiakou Caijiaying Lead Zinc Mining Company), the
non controlling equity holders in Hebei Hua Ao and Rmb53,355,000 ($8,655,000) (2012 - Rmb58,191,000 ($9,291,000)) was
incurred in haulage costs with the Third Geological Brigade of the Hebei Province who have an interest in the Zhangjiakou
Caijiaying Lead Zinc Mining Company.

17. SHARE CAPITAL

AUTHORISED:
Ordinary shares of US$0.01 each

CALLED UP ALLOTTED AND FULLY PAID:
Ordinary shares of US$0.01 each
At 1st January
Issued during the year
Bought back in for cancellation

At 31st December

2013

2012

Number

$000

Number

$000

1,000,000,000

10,000

1,000,000,000

10,000

175,451,830
3,900,000
(260,000)

1,755
39
(3)

179,091,830

1,791

175,501,830
-
(50,000)

175,451,830

1,755
-
-

1,755

During 2013 260,000 (2012 50,000) ordinary shares were bought in for cancellation from the market under a buy back
programme at an average price of 29.5 UK pence ($0.445) (2012 average 29.5 UK pence ($0.475) per share).

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

18. SHARE OPTIONS AND WARRANTS

At 1st January (Exercised) / At 31st December
2013
Number

(lapsed)
Number

2013
Number

Options exercisable at 20 pence per share to 31st October 2013
Options exercisable at 45 pence per share to 28th February 2015

4,333,333
10,000,000
14,333,333

(4,433,333)
-
(4,433,333)

-
10,000,000
10,000,000

The following table shows the number and weighted average exercise price of all the unexercised share options and warrants at
the year end:

2013
Number Weighted average
exercise price
Pence

2012
Number Weighted average
exercise price
Pence

Outstanding at 1st January

Lapsed during the year

Exercised in year

Outstanding at 31st December

14,433,333

(33,333)

(4,400,000)

10,000,000

37.5

(20.0)

45.0

14,433,333

37.5

The estimated value of the options exercisable at 45p up to 28th February 2015, which vest in 3 tranches of 3,333,333 each, were
18.68p, 19.45p and 21.12p.

Inputs into the Binomial valuation model were as follows:

Share price
Exercise price
Expected volatility
Risk free yield
Dividend yield

Options expiring
28th February 2015

Options expiring
31st October 2013

43.25p
45.0p
65%
2.84%
0%

14.0p
20.0p
60%
3.97%
4%

Expected volatility was determined by calculating the historical volatility of the Company's share price with reference to the
correlation with the zinc price and zinc price volatility over the same period. The Binomial model used assumes that the options
will be exercised early when the share price exceeds the exercise price by a multiple of two.

The Group recognised a total expense of $Nil (2012 $25,000) during the year ended 31st December relating to equity settled
share option scheme transactions.

19. DIVIDENDS

No dividends were paid in 2013 (2012 nil).

20. LONG-TERM PROVISION

PROVISION FOR MINE CLOSURE COSTS

At 1st January
Transfer property plant and equipment (note 12)
Foreign exchange adjustments

At 31st December

2013
$000
2,535
-
56

2,591

2012
$000
806
1,647
82

2,535

R E P O RT A N D A C C O U N T S 2 0 13

NOTES TO THE FINANCIAL STATEMENTS

20. LONG-TERM PROVISION (CONTINUED)

During 2007 the Group paid two bonds under PRC regulations totalling $766,000 to be used to cover end of mine life restoration
costs. Provision for mine closure and rehabilitation costs have been made in accordance with the laws and regulations of China
at a rate of Rmb 0.5 per tonne of estimated resources.

On 25th June 2012 China Zinc Limited acquired a further 28.8% of the existing joint venture partner's interest in Hebei Hua
Ao, and with effect from 21st May 2012 the term of the joint venture's business licence was extended to 12th October 2037.
In view of the extension of Hebei Hua Ao's business licence, thereby increasing the term of the joint venture, the rehabilitation
provision has been increased to reflect the increase in the amount of extractable ore over the period of the joint venture.

21. DEFERRED TAXATION

At 1st January
Prior period adjustment
At 1st January restated
Foreign exchange adjustments
Charge for the year
At 31st December

2013
$000
1,316
-
1,316
33
297
1,646

2012
$000
-
1,316
1,316
-
-
1,316

Deferred taxation is provided in full on temporary differences under the liability method using a tax rate of 25%. The deferred
taxation provision arises on accelerated depreciation in the PRC deductable for taxation purposes.

22. FINANCE LEASE

Amounts falling due in more than one year
Amounts falling due within one year

2013
$000
12,012
487
12,499

2012
$000
-
-
-

Under the terms of an agreement Hebei Hua Ao pays Rmb21.32 per wet tonne treated by a dry tailings facility at Caijiaying.
At the end of the agreement term in February 2021, this facility becomes the property of Hebei Hua Ao with no further payment.
In determining the total liability it is assumed that one half of future production over the term of the agreement will be treated
by the dry tailings facility. In determining the value of the dry tailings facility and applicable interest a deemed interest rate of
6.6% has been applied. Hebei Hua Ao holds all the risks and rewards of ownership.

23. TRADE AND OTHER PAYABLES

Trade creditors
Other creditors
Accruals

2013
$000
9,550
1,806
2,859
14,215

2012
$000
5,672
3,613
3,305
12,590

All amounts are short term. The carrying values of all trade and other payables are considered to be a reasonable approximation
of fair value.

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

24. BANK LOANS

Bank loans falling due within one year

2013
$000
49,205

2012
$000
47,112

The bank loans are repayable within one year under revolving facilities. At 31st December 2012 the loan from Zhangjiakou
Commercial Bank of $13,415,000 was secured on inventories held at Caijiaying. This loan was repaid during 2013. All other
amounts were unsecured. The bank loans carried interest as follows:

Zhangjiakou Commercial Bank
Bank of Communications
Bank of China

2013

2012

$000
-
16,402
32,803
49,205

6.6
6.6

$000
13,415
8,023
25,674
47,112

%
10.44
6.6
6.6

25. ATTRIBUTABLE NET ASSET VALUE / TOTAL EQUITY PER SHARE

The attributable net asset value / total equity per share has been calculated from the consolidated net assets / total equity of the
Group at 31st December 2013 of $147,731,000 ($137,786,000 at 31st December 2012) divided by the number of ordinary shares
in issue at 31st December 2013 of 179,091,830 (175,451,830 at 31st December 2012).

26. RISK MANAGEMENT

The Group is exposed to a variety of financial risks which result from its operating and investing activities. The Group's risk
management is coordinated by its senior management and executive directors and focuses on actively securing the Group's short
to medium term cash flows.

Foreign Currency Risk

The majority of the Group's operational and financial cash flows are denominated in Renminbi and United States Dollars with
sterling bank deposits held to cover future sterling expenditure estimates.

Currently the Group does not carry out any significant operations in currencies outside the above.

The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange
exposure and will consider hedging significant foreign currency exposure should the need arise. In addition, the conversion of
Renminbi into foreign currencies is restricted and subject to the rules and regulations of foreign exchange control promulgated
by the government of the PRC.

Sterling bank deposits translated into United States Dollars at the closing rate are as follows:

Short term bank deposits

2013
$000

2,385

2012
$000

1,722

R E P O RT A N D A C C O U N T S 2 0 13

NOTES TO THE FINANCIAL STATEMENTS

26. RISK MANAGEMENT (CONTINUED)

Foreign Currency risk (continued)

The following table illustrates the sensitivity of the net results for the year and equity in regards to the Group's sterling deposits
and the sterling US Dollar exchange rate. It assumes a + / - 10% change in the sterling exchange rate for the year ended 31st
December 2013. These changes are considered to be reasonable based on observation of current market conditions for the year
ended 31st December 2012. The sensitivity analysis is based upon the Group's sterling deposits at each reporting date.

If sterling had strengthened against the US Dollar by 10% (2012 10%) this would have had the following impact:

Net result for the year and on equity

2013
$000

265

If sterling had weakened against the US Dollar by 10% (2012: 10%) this would have the following impact:

Net result for the year and on equity

2013
$000

(217)

2012
$000

191

2012
$000

(157)

Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the
analysis above is considered to be indicative of the Group's exposure to currency risk.

With the Renminbi exchange rate linked to the value of the US dollar and with relatively small amounts held in Australian dollars,
the effect on the net results and equity of changes in Renminbi and Australian dollar exchange rates are not expected to be
significant.

Foreign currency denominated financial assets and liabilities, translated into US Dollars at the closing rate, are as follows:

2013

Rmb
$000

GBP
$000

2,497

24,448

(130)

(78,398)

2,367

(53,950)

AusD
$000

633

(5)

628

2012

Rmb
$000

GBP
$000

1,697

15,232

(294)

(63,248)

1,403

(48,016)

AusD
$000

739

(1)

738

Financial assets

Financial liabilities

Short term exposure

Interest rate risk

The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's bank loans and deposits
with floating interest rates. The Group currently does not have an interest rate hedging policy.

The following table illustrates the sensitivity of the net results for the year and equity to a reasonably possible change in
interest rates of + 300% and - 100% (2012 + 300% - 100%), with effect from the beginning of the year. These changes are
considered to be reasonable based on observation of current market conditions within which the Group operates. The sensitivity
analysis is based upon the Group's deposits at each balance sheet date.

Net result for the year

2013

2012

Plus 300%

Minus 100%

Plus 300%

Minus 100%

$000

968

$000

(145)

$000

548

$000

(183)

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

26. RISK MANAGEMENT (CONTINUED)

Interest rate risk (continued)
Fixed and non interest bearing financial assets and liabilities are as follows:

Floating
interest
rate
$000

26,278
-

26,278

(49,205)
(12,499)
-
(61,704)

(35,426)

2013

Non
interest
bearing
$000

-
3,309

3,309

-
-
(11,356)
(11,356)

Total

$000

26,278
3,309

29,587

(49,205)
(12,499)
(11,356)
(73,060)

Floating
interest
rate
$000

16,764
-

16,764

(47,112)
-
-
(47,112)

2012

Non
interest
bearing
$000

Total

$000

-
2,810

2,810

16,764
2,810

19,574

-
-
(9,285)
(9,285)

(47,112)
-
(9,285)
(56,397)

(8,047)

(43,473)

(30,348)

(6,475)

(36,823)

Financial Assets
Cash at bank
Other receivables

Total Financial Assets

Bank Loans
Finance Lease Liabilities
Trade and other payables
Total Financial Liabilities

Net Financial (Liabilities)

Commodity risk

The Group is exposed to the risk of changes in commodity prices and in particular that for zinc, gold and to a lesser extent silver
and lead. The Group currently sells its metal concentrate production by way of open auctions in China. The Group did not
hedge its metal production in 2013 or in 2012.

The following table illustrates the sensitivity of the net results for the year and equity to a reasonably possible change in the
market price of zinc, gold and silver of plus 20% and minus 20% (2012 plus 20% and minus 20%), with effect from the beginning
of the year. These changes are considered reasonable based upon observation of current market conditions within which the
Group operates. This sensitivity analysis is based upon the Group's sales in each year.

Net results for the year - zinc

Net results for the year - gold

Net results for the year - silver

Credit risk

2013
Plus 20% Minus 20%
$000

$000

2012

Plus 20%
$000

Minus 20%
$000

7,765

2,120

815

(7,765)

(2,120)

(815)

8,025

1,871

1,401

(8,025)

(1,871)

(1,401)

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Group is exposed to credit risk from its financing activities, including deposits with banks and financial
institutions, foreign exchange transactions and other financial instruments. The Group does not have trade receivables and does
not hold collateral as security.

Credit risk from balances with banks and financial institutions is managed by the Board. Investments of surplus funds are made
only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed
by the Griffin Board on a regular basis. The limits are set to minimise the concentration of risks and therefore mitigate financial
loss through potential counterparty failure. No material exposure is considered to exist by virtue of the possible non performance
of the counterparties to financial instruments.

R E P O RT A N D A C C O U N T S 2 0 13

NOTES TO THE FINANCIAL STATEMENTS

26. RISK MANAGEMENT (CONTINUED)

Liquidity Risk

The Group is exposed to liquidity risk in the event that Hebei Hua Ao is unable to renew and roll over its banking facilities.
As described in note 24 at 31st December 2013 the Group had bank loans outstanding under revolving credit facilities due within
one year of $49,205,000 with an additional $17,580,000 in other payables due within one year whilst cash balances throughout
the Group at that date were $26,278,000. During 2013 the Group generated $22,305,000 after tax and to date has been able to
fully service its debts and meet all obligations. In January 2014 Hebei Hua Ao renewed banking facilities of $8.2m for a further
year. The Group does not expect any acceleration in payment terms for other payables.

27. CAPITAL MANAGEMENT AND PROCEDURES

The Group's capital management objectives are:

• To ensure the Group's ability to continue as a going concern;

• To increase the value of the assets of the Group; and

• To enhance shareholder value in the Company and returns to shareholders.

The achievement of these objectives is undertaken by developing existing ventures and identifying new ventures for future
development. The Company will also undertake other transactions where these are deemed financially beneficial to the Company.

The directors continue to monitor the capital requirements of the Group by reference to expected future cash flows. Capital
for the reporting periods under review is summarised in the consolidated statement of changes in equity. The directors consider
the capital of the Group to be the total equity attributable to the equity holders of the parent of $147,731,000 at 31st December
2013.

28. FINANCIAL INSTRUMENTS

The Group does not enter into derivative transactions such as interest rate swaps, forward rate agreements or forward currency
contracts. Funds in excess of immediate requirements are placed in US dollar, Chinese Renminbi, and sterling short term fixed
and floating rate deposits. The Group has overseas subsidiaries operating in China and Australia, whose costs are denominated
in local currencies.

In the normal course of its operations the Group is exposed to commodity price, foreign currency and interest rate risks.

The Group places funds in excess of immediate requirements in US dollar, Chinese Renminbi, and sterling deposits with a
number of banks to spread currency, interest rate and bank risk. These deposits are kept under regular review to maximise interest
receivable and with reference to future expenditure and future currency requirements.

Commodity prices are monitored on a regular basis to ensure the Group receives fair value for its products.

The Group held the following investments in financial assets and financial liabilities:

FINANCIAL ASSETS
Loans and receivables
Cash and cash equivalents

FINANCIAL LIABILITIES
Loans
Trade and other payables

2013
$000

4,214
26,278
30,492

61,704
14,215
75,919

2012
$000

4,168
16,764
20,932

47,112
12,590
59,702

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

29. SUBSIDIARY COMPANIES

At 31st December 2013, Griffin Mining Limited had interests in the share capital of the following principal subsidiary companies.

Name

Class of Share
held

Proportion of
shares held

Nature of
business

Country of
incorporation

China Zinc Pty Ltd

China Zinc Limited

Hebei Hua’ Ao Mining
Industry Company Ltd*

Ordinary

Panda Resources Ltd

Ordinary

Hebei Sino Anglo Mining
Development Company Ltd*

100%

88.8%**

100%

90%

Service company

Australia

Holding company

Hong Kong

Base and precious
metals mining and
development

Holding company

Mineral exploration
and development

China

England

China

* China Zinc Ltd, China Zinc Pty Ltd and Panda Resources Ltd are directly owned by the Company. China Zinc Ltd has a
controlling interest in Hebei Hua' Ao Mining Industry Company Ltd, see below, and Panda Resources Ltd has a 90%
controlling interest in Hebei Sino Anglo Mining Development Company Ltd.

** The joint venture contract establishing the Hebei Hua' Ao Mining Industry Company Ltd originally provided that the foreign
party (China Zinc) received 60% of the cash flows, in accordance with its share in the equity interest in the joint venture.
With effect from 25th June 2012, when 28.8% of the local Chinese joint venture partner's equity interest in Hebei Hua Ao
was acquired, China Zinc receives 88.8% of the cash flows and profits of Hebei Hua Ao. On 21st May 2012 the term of the
joint venture's business licence extended to 12th October 2037.

30. COMMITMENTS

At 31st December 2013 the Group had capital commitments of $630,000 (31st December 2012 $333,000).

31. CONTINGENT LIABILITIES

As described in note 29, the joint venture contract establishing the Hebei Hua' Ao Mining Industry Company Ltd provides
that with effect from 24th July 2008, the cash flows were shared 60% by the foreign party and 40% by the Chinese party, and
since 25th June 2012 88.8% by the foreign party and 11.2% by the Chinese party in accordance with their share in the equity
interest in Hebei Hua Ao. The registered capital (equity) of Hebei Hua' Ao was provided in full by China Zinc. Although all
the registered capital of Hebei Hua Ao has been provided by China Zinc, in view of the unusual nature of the joint venture
contract and uncertainty as to its interpretation, provision has only been made for the non controlling interests in the profits of
Hebei Hua Ao with no provision made in respect of the net assets of Hebei Hua Ao. At 31st December 2013, the net assets of
Hebei Hua' Ao amounted to $50m. The non-controlling share of the net assets at 31st December 2013 on a termination of
Hebei Hua' Ao could amount to $2.6m. This liability is only trigged on the early termination of the joint venture or at the end
of the joint venture term when the net assets are not expected to be significant.

R E P O RT A N D A C C O U N T S 2 0 13

CORPORATE INFORMATION

London office:

6th & 7th Floors, 60 St James’s Street, London. SW1A 1LE. UK.
Telephone: + 44 (0)20 7629 7772
Facsimile: + 44 (0)20 7629 7773
Email: griffin@griffinmining.com
Website: www.griffinmining.com

Registered office:

Clarendon House, 2 Church Street, Hamilton. HM11. Bermuda.

China Zinc office:

Level 9, BGC Centre, 28 The Esplanade, Perth. WA 6000. Australia.
Telephone: + 61 (0)8 9321 7143
Facsimile: + 61 (0)8 9321 7035

Directors:

Mladen Ninkov (Chairman)
Roger Goodwin (Finance Director)
Dal Brynelsen
Rupert Crowe
Adam Usdan

Company Secretary:

Roger Goodwin

Nominated Adviser
and Broker for AIM:

Panmure Gordon (UK) Limited
One New Change, London. EC4M 9AF. UK.

Auditors:

Solicitors:

Grant Thornton UK LLP
Grant Thornton House, Melton Street, London. NW1 2EP. UK.

DLA Piper UK LLP
20th Floor, South Tower, Beijing Kerry Centre, 1 Guang Hua Road,
Chao Yang District, Beijing. 100020. PRC

Conyers Dill & Pearman
Clarendon House, Church Street, P.O. Box HM 666,
Hamilton. HMCX. Bermuda.

Addleshaw Goddard LLP
Milton Gate, 60 Chiswell Street, London. EC1Y 4AG. UK.

King & Wood Malleson
9/F, Hutchison House, 10 Harcourt Road, Central, Hong Kong

Bankers:

HSBC Bank plc
27-32 Poultry, London. EC2P 2BX. UK

The Hong Kong and Shanghai Banking Corporation Limited
HSBC Main Building, 1 Queen's Road Central, Hong Kong

National Westminster Bank PLC.
St James’s and Piccadilly, London. W1A 2DG. UK.

The Bank of Bermuda Ltd
6 Front Street, Hamilton. HM11. Bermuda.

UK Registrars
and Transfer Agents:

Capita Registrars (Jersey) Limited
12 Castle Street, St Helier, Jersey. JE2 3RT. UK.

G R I F F I N M I N I N G L I M I T E D

R E P O RT A N D A C C O U N T S 2 0 13

Caijiaying Mine, Winter 2014

G R I F F I N M I N I N G L I M I T E D