Contents
Chairman’s statement
Overview
Caijiaying
IntroductIon
development
mIneral resource estImates
GeoloGy
exploratIon
operatIons
sustainability, envirOnment and lOCal COmmunity
FinanCial results
strategiC review
overvIew
caIjIayInG
acquIsItIons and Further projects
COrpOrate gOvernanCe
report oF the audIt commIttee
report oF the remuneratIon commIttee
direCtOrs
seniOr exeCutives
direCtOrs’ repOrt
independent auditOrs’ repOrt tO the members OF griFFin mining limited
COnsOlidated inCOme statement
COnsOlidated statement OF COmprehensive inCOme
COnsOlidated statement OF FinanCial pOsitiOn
COnsOlidated statement OF Changes in equity
COnsOlidated Cash FlOw statement
nOtes tO the FinanCial statements
COrpOrate inFOrmatiOn
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84
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 in Bermuda, number: 13667.
Registered Office: Clarendon House, 2 Church Street, Hamilton HM11, Bermuda
United Kingdom office: 8 Floor, 54 Jermyn Street, London. SW1Y 6LX
1
RepoRt and accounts 2020
2
Griffin MininG LiMited Caijiaying Mine Site Summer 2020
3
RepoRt and accounts 2020 Chairman’s statement
It gives me unbridled pleasure to present to you, the
Fourthly, yet another outstanding operational result
shareholders of Griffin Mining Limited (“Griffin” or
considering operations were either suspended or severely
the “Company”), the Annual Report and Accounts of the
curtailed in the first quarter of 2020 due to the Covid-19
Company for the 2020 calendar and financial year (the
pandemic, with access being denied for the whole of 2020
“Annual Report”). I believe I can safely say, this was the
to the deeper stopes in Zone III awaiting PFA approval
year when Griffin fulfilled all of its outstanding promises
and the wait for the Zone II new Mining Licence.
to its past, current and future shareholders by delivering
Nevertheless, operating profit, profit before tax, profit
the confirmed regulatory and operational requirements to
after tax and earnings per share all increased. Griffin now
propel the Company forward into the foreseeable future.
has the extraordinary claim that it has been profitable on
The list of achievements is extraordinary.
an operational basis, in all the turmoils of the commodities
Firstly, the granting by the Chinese Ministry of Land and
markets, for the full 15 years it has been in operation and
has only made a loss, on a net profit basis, in one of those
Natural Resources (the “MNR”) of new the Mining Licence
years.
covering both Zone II and Zone III in conjunction with the
issuance of the 3rd Stage Zone III Project Final Acceptance
Fifthly, and although I place little faith in the share price as
Permit (the “PFA”) was a momentous achievement in terms
an indicator of value, in the last 12 months the Company’s
of time, complexity and operational importance. It will
share price has increased approximately 200%; 65.1%
increase the annual ore mined from Zone III from 820,000
against the FTSE Fledgling Index, 64% against the FTSE
tonnes in 2020 to 1.1 million tonnes in 2021, but with the
All AIM Index and 60% against the FTSE Small Mining
increased ore accessed from Zone II, this should increase
Cap Index. A remarkable performance.
to over 1.5 million tonnes per annum in 2022, possibly
increasing further as these zones continue to be developed.
It catapults Griffin into the ranks of one of the largest zinc
producers in China, which remains the largest consuming
base and ferrous metals market in the world.
As the Company has grown and generated cash, inevitably
various opinions have been voiced in relation to the share
price, share buybacks, dividends and even the realization
of the value of the Company. It is enough to say that your
board continues to evaluate all these options on an ongoing
Secondly, the announcement of the new Global Mineral
and meticulous basis and remains committed to ensuring
Resource estimate reported in accordance with the JORC
that the views of all the shareholders are considered and,
Code (2012) for the Caijiaying Mine of an amazing 101.5
where possible, acted upon, a course of action that Solomon
million tonnes at 3.9% Zinc, 0.6% Lead, 27.0 g/t Silver
himself, with all his wisdom, would find difficult.
and 0.5 g/t Gold, resulting in total contained metal of
approximately 4.0 million tonnes of Zinc, 0.6 million tonnes
of Lead, 88.8 million ounces of Silver and 1.59 million
ounces of Gold totalling $17.7 billion of metal in situ, a
50% increase in the known mineral resource.
The Company continues to evaluate opportunities not
only through acquisition or organic expansion but also
through continuing exploration at the Caijiaying Mine and
the surrounding region and through exploration outside of
Hebei Province wherever host rocks mimic the Caijiaying
Thirdly, obtaining Green Mine accreditation by the MNR
Mine area and provide the potential for significant
having passed the national level green mine assessment.
exploration success.
Failing to obtain certification would have meant closure of
the Caijiying Mine. So not only has the smooth continuation
of operations at the Caijiaying Mine been ensured, but
it continues also to show the Company’s commitment
to the environment, the local Chinese community and
to the greater People’s Republic of China. Green Mine
approval comes after the Company’s past environmental
best practices were recognised by the Chinese government
with the Environmental Award and the Mine Development
Penultimately, I would like to thank our Chinese and ex pat
employees, contractors, consultants, subsidiary directors,
partners, spouses and children. Life has taught me that
people make things happen and, in the extraordinary
Covid-19 year of 2020, these very people went above and
beyond the call of duty to travel and work in extremely
difficult circumstances, often leaving homes and loved ones,
to put the Company’s interests first. We couldn’t be more
Outstanding Achievement Award at successive China
grateful.
Mining Conferences.
4
Griffin MininG LiMited Lastly, I would like to thank on behalf of the shareholders,
It would be absolutely wrong of me to not mention Rupert,
those few to whom we owe so much and of whom Michael
even though I have said much before. His wisdom, expertise
Jordan said in The Last Dance “Have some respect for the
and counsel are missed every day by all of us at Griffin.
people who laid the foundations to make this a profitable
Without him, the Caijiaying Mine would have remained a
organization.” I call them the founders of the Company.
valley, topped by Mongolian sands, next to a little village
Those who believed when no-one believed. Those who
in northern China. An extraordinary, brilliant geologist, the
flew standby (when that existed) and sat at the airport for
Father of Caijiaying and, far more importantly, a gracious,
a week hoping to catch a flight home. Those few who
gentle, considered, dedicated, intelligent human being it
went to Caijiaying when it was a 12-hour drive from
has been my absolute privilege to know and to have spent a
Beijing on a single lane gravel road overrun with over-
large portion of my working life.
laden coal trucks and stayed at what can only loosely be
called accommodation. Those few who took no salaries or
compensation and stayed when the Company had almost
run out of funds. Those few who worked out of a terrible,
serviced office the size of a cupboard. Those few include
Roger Goodwin, Dal Brynelsen, the deceased Bill Mulligan
and the recently departed Rupert Crowe.
With the past behind us, I look forward to the next year of
this incredible journey.
Mladen Ninkov
Chairman
13 May 2021
The early years - Mladen Ninkov & Rupert Crowe on the abandoned workings at Zone V at Caijiaying in 2004
5
RepoRt and accounts 2020 overview
Griffin Mining Limited (“Griffin” or “the Company”) is a
surrounding the Hebei Hua Ao licence area which are held
mining and investment company, incorporated in Bermuda,
by Griffin’s joint venture partner, Zhangjiakou Yuanrun
whose shares are quoted on the Alternative Investment
Enterprise Management Consulting Service Co., Ltd
Market of the London Stock Exchange (“AIM”).
(“Yuanrun”), so as to allow their retention under PRC law
The major asset of the Company is an 88.8% interest in
Hebei Hua Ao Mining Industry Company Limited (“Hebei
Hua Ao”) through its wholly-owned Hong Kong subidiary,
China Zinc Limited (“China Zinc”), which holds 5.4 square
within the Hebei Hua Ao Group. Should a mining licence
be granted over this area at any point in the future, this
new licence may be contractually transferred back to Hebei
Anglo at the Company’s option.
kilometres of mining, retention and exploration tenements,
The Company continues to aggressively explore, expand
including the mine and processing facilities near Caijiaying
and develop the Caijiaying Mine whilst also investigating
Village (the “Caijiaying Mine”) in the People’s Republic of
potential acquisitions of mining projects that are capable,
China (“PRC”).
The Company also holds 90% of Hebei Sino Anglo
Mining Development Company Limited (“Hebei Anglo”),
which has interests in exploration licences immediately
through either advanced exploration or mining expertise
held within the company, of being brought into production
to meet the Company’s historically preset, economic returns
to shareholders.
Geographic location of the Caijiaying Mine, People’s Republic of China
6
Griffin MininG LiMited Caijiaying
INTRODUCTION
The Caijiaying Mine is an operating zinc, gold, silver
and lead mine, together with processing plant, camp and
supporting facilities, located approximately 250 kilometres
by road, north-west of Beijing in Hebei Province in the PRC.
The Caijiaying Mine is easily accessible by separate freeways
from Beijing. The site has significant water supplies, two
35,000 volt power lines connected to the electricity grid,
full connectivity to fixed and mobile telecommunications
systems and broadband access for internet services. It is 63
kilometres from Chongli, the joint host city of the 2022
Winter Olympic Games, connected via a new high speed
train link with Beijing. Climatic conditions are not severe
with warm summers and cold, dry winters, enabling the
Caijiaying Mine to operate for 365 days a year.
DEVELOPMENT
The Caijiaying Mine was commissioned on time and on
budget in 2005. Numerous upgrades to the Caijiaying Mine
have taken place since commissioning leading to the current
name plate mill throughput capacity of 1.5 million tonnes
of ore per annum. With mining and haulage rates from
Zone III limited to sub 1 million tonnes of ore per annum
this capacity has yet to be fully utilised but is expected to
be in 2021 as further recent development of Zone III and
development of the Zone II area at Caijiaying are mined.
Underground development continues with the expansion of
the existing mining operations at Zone III. In December
2020, following 2 years of capital development and the
installation of relevant underground services, the Chinese
Safety Bureau granted the 3rd Stage Project Final
Acceptance Permit (“PFA”). This significant milestone
extends the underground mineable ore zone at Zone III
from the current 1175m Relative Level (“RL” which in this
Hebei Hua Ao is a contractual co-operative joint venture
report shall refer to mean sea level) down to the 1000m RL.
company established in 1994 under PRC law. Initially,
This will enable the underground operations in Zone III to
Griffin held 60% of Hebei Hua Ao (through a wholly owned
extract 1.1 million tonnes of Zinc-Gold ore per annum in
subsidiary) with the remaining 40% held by Yuanrun, the
2021 compared to the 855,000 tonnes of ore mined in 2020.
shareholders of which are the Zhangjiakou City People’s
This represents a 29 % increase in mineable ore production
Government and the Third Geological Brigade of Hebei
per annum from Zone III alone.
Province (the “Third Brigade”).
With the granting of a new mining licence in December
The initial operating term of Hebei Hua Ao was 25 years
2020 over both the Zone III and Zone II areas and
and was due to expire in 2019. In light of the continuing
enhanced safety production permits at the Caijiaying Mine,
increase in the resources base and production profile of
development of the Zone II area is due to commence shortly
the Caijiaying Mine, the Company, through China Zinc,
after approval of the proposed Zone II mine design, which
purchased an additional 28.8% interest in Hebei Hua Ao
will enable at least 1.5 million tonnes of ore to be extracted
from Yuanrun in 2012. Griffin now holds an 88.8% equity
from the Caijiaying Mine in future years.
interest in Hebei Hua Ao and Yuanrun retains an 11.2%
residual interest compensated via a fee for services rendered,
resulting in Hebei Hua Ao being in the nature of a wholly
owned subsidiary of the Company with a service contract to
Yuanrun for accounting purposes. In addition, and as part
of this purchase agreement, the term of the Hebei Hua Ao
joint venture was extended to October 2037.
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 (“Panda”), has a 90% interest in Hebei Anglo
whilst Yuanrun holds 10%. As Griffin investigates other
areas of interest and projects in China, Hebei Anglo may be
used to invest in any such potential projects.
7
RepoRt and accounts 2020 8
Griffin MininG LiMited Aaccommodation Camp Winter 2020 / 2021
9
RepoRt and accounts 2020 Caijiaying (contInued)
MINERAL RESOURCE ESTIMATES
Caijiaying Zone III Remaining Mineral Resources December 31 2020
Zone III Domain 1 Zn Resources > 1% Zn
Tonnes
(Mt)
Zn
(%)
19.0
10.0
17.9
46.8
4.5
4.0
4.0
4.2
Pb
(%)
0.2
0.2
0.2
0.2
Ag
(g/t)
23.0
18.0
22.0
21.0
Au
(g/t)
0.6
0.6
0.4
862
397
718
0.5
1,977
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
42
17
36
95
13,932
389
5,781
183
12,364
210
32,077
781
Zone III Domain 2: Au Resources > 0.5 g/t Au
Tonnes
(Mt)
Zn
(%)
0.7
0.7
0.8
0.8
Tonnes
(Mt)
Zn
(%)
19.0
10.0
18.6
47.5
4.5
4.0
3.9
4.2
Pb
(%)
0.1
0.1
Pb
(%)
0.2
0.2
0.2
0.2
Ag
(g/t)
20.0
20.0
Au
(g/t)
3.0
3.0
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
6
1
446
68
6 1 446
68
Zone III: Total
Ag
(g/t)
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
23.0
18.0
21.0
21.0
0.6
0.6
0.5
0.6
862 42
13,932
389
397 17
5,781
183
724 36
12,810
277
1,983 96
32,523
849
Caijiaying Zone II Remaining Mineral Resources January 2021
Zone II Oxide: Zn Resources > 1% Zn
Tonnes
(Mt)
Zn
(%)
1.2
1.6
2.8
2.9
2.5
2.7
Pb
(%)
0.5
0.5
0.5
Ag
(g/t)
19.0
17.0
18.0
Au
(g/t)
0.3
0.1
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
35
6 751
11
39
8 830
7
0.2
74
14 1,581
17
Zone II Fresh: Zn Resources > 1% Zn
Tonnes
(Mt)
11.5
26.4
37.9
Tonnes
(Mt)
12.7
27.9
40.7
Zn
(%)
3.8
3.7
3.7
Zn
(%)
3.7
3.6
3.7
Pb
(%)
0.9
1.0
1.0
Pb
(%)
0.9
1.0
0.9
Ag
(g/t)
27.0
30.0
29.0
Au
(g/t)
0.3
0.4
0.4
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
436
109
10,085
96
977
253
25,108
350
1,413 362
35,193
446
Zone II Total
Ag
(g/t)
27.0
29.0
28.0
Au
(g/t)
0.3
0.4
0.4
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
471
115
10,836
107
1,015
261
25,938
356
1,486 376
36,774
463
Category
Measured
Indicated
Inferred
Sub-Total
Category
Inferred
Sub-Total
Category
Measured
Indicated
Inferred
Total
Category
Indicated
Inferred
Total
Category
Indicated
Inferred
Sub-Total
Category
Indicated
Inferred
Total
10
Griffin MininG LiMited
Caijiaying Zone V Mineral Resources February 2021
Zone V Zn Resources > 1% Zn
Category
Inferred
Total
Tonnes
(Mt)
6.0
6.0
Zn
(%)
3.2
3.2
Pb
(%)
1.4
1.4
Ag
(g/t)
56.0
56.0
Au
(g/t)
0.6
0.6
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
191 84
10,819
116
191 84
10,819
116
Caijiaying Zone VIII Mineral Resources February 2021
Zone VIII Domain 1: Zn Resources > 1% Zn
Tonnes
(Mt)
Zn
(%)
6.6
6.6
4.6
4.6
Pb
(%)
0.7
0.7
Ag
(g/t)
36.0
36.0
Au
(g/t)
0.5
0.5
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
304
45
7,675
112
304 45 7,675
112
Zone VIII Domain 2: Au Resources > 0.5 g/t Au
Tonnes
(Mt)
Zn
(%)
0.7
0.7
0.7
0.7
Tonnes
(Mt)
Zn
(%)
7.3
7.3
4.2
4.2
Pb
(%)
0.7
0.7
Pb
(%)
0.7
0.7
Ag
(g/t)
45.0
45.0
Au
(g/t)
2.4
2.4
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
5
5
1,015
54
5 5
1,015
54
Zone VIII Total
Ag
(g/t)
37.0
37.0
Au
(g/t)
0.7
0.7
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
309
50
8,690
166
309 50
8,690
166
Category
Inferred
Total
Category
Inferred
Total
Category
Inferred
Total
Caijiaying Combined Global Mineral Resources February 2021
Category
Measured
Indicated
Inferred
Total
Tonnes
(Mt)
Zn
(%)
19.0
22.7
59.8
101.5
4.5
3.8
3.7
3.9
Pb
(%)
0.2
0.6
0.8
0.6
Ag
(g/t)
23.0
23.0
30.0
27.0
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal Au Metal
(kOz)
(kOz)
0.6
0.4
0.5
0.5
862
42
13,932
389
868
132
16,617
289
2,239
432
58,258
915
3,968 606
88,806
1,593
Notes:
The Caijiaying Mineral Resources are based on resource modelling work completed by CSA Global Pty Ltd and reported in 2021 in accordance
with JORC 2012 guidelines. The information in this report that relates to Mineral Resources is based on, and fairly reflects, information compiled
by Mr Serikjan Urbisinov a Competent Person, who is a Member of the Australian Institute of Geoscientists. Mr Serikjan Urbisinov is a full-
time employee of CSA Global Pty Ltd. Mr Serikjan Urbisinov has sufficient experience relevant to the style of mineralisation and type of deposit
under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 edition of the Australasian
Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Serikjan Urbisinov consents to the
disclosure of the information in this report of the matters based on his information in the form and context in which it appears.
11
RepoRt and accounts 2020
Caijiaying (contInued)
MINERAL RESOURCE ESTIMATES
underground drilling access is established and mining
The 2020 Zone III Mineral Resource estimate based on
the updated 2018 Mineral Resource estimate at a zinc
cut-off grade of 1%, amended for mining depletion as at
31 December 2020, is shown in Table 1 on page 10. Also
included in the table and subsequent to the reporting period
are the additional Mineral Resources of Zones II, V and
VIII. This new global Measured, Indicated and Inferred
Mineral Resource estimate totals 101.5 million tonnes at
3.9% Zn, 0.6% Pb, 27g/t Ag and 0.5g/t Au, resulting in
activities begin into 2021.
A total of 109 surface diamond drillholes, 91 reverse
circulation surface drillholes and 163 underground diamond
drillholes define the Zone II deposit at an average spacing of
approximately 40 metre x 40 metre for a combined total of
91,383 metres of drilling.
Zone V
total contained metal of approximately 4.0 million tonnes of
The maiden Inferred Zone V Mineral Resource estimate
zinc, 0.6 million tonnes of lead, 88.8 million ounces of silver
totals 6.o million tonnes at 3.2% Zn, 1.4% Pb, 56g/t Ag and
0.6g/t Au resulting in total metal of approximately 0.2 million
tonnes of zinc, 0.08 million tonnes of lead, 10.8 million
ounces of silver and 0.12 million ounces of gold. Zone V is
located within the Company’s Retention Licence just 0.8 km
west of Zone II. A total of 34 surface diamond drillholes, 3
reverse circulation surface drillholes with an average spacing
of approximately 25 metre x 100 metre define the Zone V
deposit for a combined total of 15,242 metres of historical
drilling.
Zone VIII
The maiden Inferred Zone VIII Mineral Resource estimate
totals 7.3 million tonnes at 4.2% Zn, 0.7% Pb, 37g/t Ag and
0.7g/t Au resulting in total metal of approximately 0.3 million
tonnes of zinc, 0.05 million tonnes of lead, 8.7 million ounces
of silver and 0.17 million ounces of gold. Zone VIII is also
located within the Company’s Retention Licence adjacent
and to the north of Zone III. A total of 44 diamond drillholes
with a spacing of 50 metre to 100 metre define the Zone VIII
deposit for a combined total of 32,193 metres. The Retention
Licence containing Zones V and VIII covers an area of 2.23
km2 and is valid from 16 July 2020 to 16 July 2022. During
this period, the Company will commence work on converting
the area to a mining licence.
and 1.59 million ounces of gold.
Zone III
The 2020 depleted Measured, Indicated and Inferred Zone
III Mineral Resource estimate totals 47.5 million tonnes at
4.2% Zn, 0.2% Pb, 21g/t Ag and 0.6g/t Au, resulting in total
metal of approximately 2.0 million tonnes of zinc, 0.1 million
tonnes of lead, 32.5 million ounces of silver and 0.85 million
ounces of gold. Extensive underground diamond drilling
throughout 2020 continued to enhance the confidence in the
resource model and to test for further extensions adjacent to
known ore bodies.
A total of 192 surface diamond drillholes, 34 reverse
circulation surface drillholes and 3,683 underground
diamond drillholes with an average spacing of approximately
40 metre x 40 metre, define the current Zone III orebody for
a combined total of 499,029 metres of drilling.
Zone II
The updated Indicated and Inferred Zone II Mineral
Resource estimate as announced on the 26th January 2021
totals 40.7 million tonnes at 3.7% Zn, 0.9% Pb, 28/t Ag
and 0.4g/t Au, resulting in total metal of approximately 1.5
million tonnes of zinc, 0.4 million tonnes of lead, 36.8 million
ounces of silver and 0.46 million ounces of gold. The Mineral
Resource has been depleted using a three-dimensional survey
“as built” wireframe which represents the mined-out-voids
as at 31 December 2020. To date there has been no stope
production in Zone II.
This resource upgrade which is now included into the
recently expanded mining licence is the result of improved
understanding of the structural controls on mineralisation
and on mineralogical associations gained from extensive
work over many years. This work is set to continue once
12
Griffin MininG LiMited GEOLOGY
The local geology comprises Early Proterozoic granulite and
gneiss with marble lenses which is unconformably overlain
by the Late Jurassic Baiqi Formation and Zhangjiakou
Formation. Porphyry sills and dykes intruding along faults
have then cut across the sequence.
The Caijiaying Mine’s deposits consist of Zn-Au-Ag-Pb
orebodies hosted in a Paleoproterozoic inlier comprising
a mixed sequence of amphibolite-grade metavolcanic and
metasedimentary rocks
intruded by three generations
of Jurassic porphyry dikes and sills. The mineralisation
comprises sulphide (sphalerite with lesser pyrite and minor
galena) lenses that favourably replace units within the folded
2.3 billion-year old metamorphic basement rocks. The base
metal and gold mineralisation have some similarities with
a skarn type of deposit. Mineralisation lenses are up to 15
metres thick, tend to dip steeply to moderately west and
extend along strike and down dip tens to hundreds of metres.
EXPLORATION
Hebei Hua Ao Mining Area
The strategy of focusing on near-mine exploration and
resource definition drilling has delivered substantial
resource growth culminating in the new Caijiaying Global
Mineral Resource in 2021.
Resource is accessible from the existing Zone III decline and
2021 will see work commence to enable an 80% increase in
production over the next 2 years to 1.5 million tonnes per
annum. This is a significant achievement that lays out a clear
path over the coming years for continued development.
At Zone III, the focus has been on aggressive underground
diamond drilling activity to convert Inferred and Indicated
Mineral Resources into Measured and Indicated categories
and to target extensions of known zinc and gold lodes
beyond the resource limits. Despite some Covid-19 related
delays in early 2020, a total of 267 underground diamond
drill holes were drilled for a total of 27,635 metres utilising 3
underground electric-hydraulic drill rigs. In 2021, diamond
drilling will focus on expanding the resource within the
mine corridor whilst also testing for extensions at depths
well below the current level of development. Continued
structural and geochemical data collection has enabled
progress toward the development of a robust indicator of
proximity to mineralisation. These lithogeochemical indices
developed for Zone III will continue to be applied in Zone
II. Significant benefits have been achieved from this detailed
work resulting in the recent upgrade to the Zone II Mineral
Resource estimate and to provide compelling near mine
exploration targets. The revised 3D structural model used
in this update will continue to be improved and applied as
development progresses and diamond drilling commences.
This will be the focus throughout 2021.
In 2020, the near mine exploration programme at the
Hebei Hua Ao Retention Licence
Caijiaying Mine continued to expand existing areas of
mineralisation whilst providing and testing new targets
designed to increase the resource inventory and extend
the existing mine life. Technical targeting studies are an
important ongoing component to the geological activities
that service mine production. Advanced geochemical
and structural modelling techniques continue to deliver
prioritised targets in the following categories:
During 2020 the Hebei Hua Ao exploration licence that
includes Zone V and VIII was converted to a retention
licence. This is the first step in the process to being granted
a new mining licence for this area. The retention licence,
which now covers 2.23 km2, is valid until to 16 July 2022.
Hebei Anglo Area
•
In-mine areas between or adjacent to known orebodies;
After careful consideration regarding tenement expiry
• Near-mine targets within reach of underground drilling
from existing or planned drives; and
• Administrative
report
compilations
and
tenure
applications to the relevant Government agencies.
dates and practical limitations to complete the necessary
administration requirements, a decision was made to transfer
the licence to Griffin’s joint venture partner Yuanrun to
allow its retention under PRC law within the Hebei Hua Ao
Group. Should a mining licence be granted over this area at
In 2020, the Zone II mining licence application was the clear
any point in the future, this new licence may be contractually
administrative priority for the Company. This unflinching
transferred back to Hebei Anglo at the Company’s option.
determination was rewarded with the approval of the
Given the depth of cover and existing underground
new single expanded mining licence covering 3.13 km2
infrastructure, the Company remains in a good position to
and includes both Zones II and III. The Zone II Mineral
benefit from any new discovery should it eventuate.
13
RepoRt and accounts 2020 14
Griffin MininG LiMited Long section view facing west of Zone III. Mineral resource wireframes (red)
and underground development and stoping (blue). Inset plan view of Caijiaying Mine’s major ore lodes.
15
RepoRt and accounts 2020 Caijiaying (contInued)
Proposed 2021 Exploration
Exploration and resource development at Zones II and III
will be the Company’s focus throughout 2021. At Zone II,
diamond drilling will test exploration targets to the east
whilst also testing areas within and adjacent to the resource
model. At Zone III, exploration will target inferred depth
extensions beneath the lower limits of development as well
as a number of near mine exploration targets to the east.
OPERATIONS
Safety
The safety and welfare of the Company’s workforce remains
a priority with underground and surface operations operated
safely and consistently in 2020 without any major incidents.
A continued focus on safety and training of the Chinese
workforce resulted in a “Lost Time Frequency Rate” of 1.28
(2019: 2.2) per one million hours and the “Total Recordable
Injury Frequency Rate” of 4.5 (2019: 13.3) per one million
hours, a significant improvement from the previous year.
PFA approvals
Following 2 years of capital development and the installation
of relevant underground services, the Chinese Safety Bureau
granted the 3rd Stage Zone III PFA. This significant
milestone extends the underground mineable ore zone
from just Zone III at the Caijiaying Mine from the current
1175m RL down to the 1000m RL. This will enable the
underground operations in Zone III to extract 1.1 million
tonnes of ore per annum beginning 2021 compared to the
855,000 tonnes of ore mined in 2020. This represents a 29%
increase in mineable ore production per annum.
The PFA works encapsulated
internal escapeways,
ventilation, dewatering, electrical and communications
systems. It is mandated that this critical infrastructure be
in place prior to the approvals process and commencement
of stoping.
Green Mine Certification
Under its ‘Green Mine Construction Plan’, the Chinese
Central Government is attempting to motivate mining
enterprises to improve their resource utilization efficiency,
protect the environment and harmonize their relationship
with communities. The MNR’s Circular of Selection of
Green Mines 2019 outlines the criteria for a green mine
including a mine’s adherence to the law, corporate culture,
quality controls relating to health, safety and environmental
protection, resource utilisation strategies, environment
restoration and reclamation processes and their relationship
with local communities. The consequence of failing to ensure
certification is closure of the designated mine. Further, in
2020, the Provincial Government of Hebei Province in its
‘Green Mines Construction Work Plan’ declared that all
non-green mines in its provincial area will be shut down from
the beginning of 2021.
Green Mine approval comes after the Company’s past
environmental best practices were recognised by the Chinese
government with the Environmental Award and the Mine
Development Outstanding Achievement Award at successive
China Mining Conferences.
Covid-19
Ore mined, hauled, and processed in 2020 was impacted by
restrictions to contain the Covid-19 pandemic. In the first
quarter of 2020, operations at the Caijiaying Mine were
suspended for a month to comply with restrictions instigated
by the PRC authorities to contain the coronavirus pandemic.
Operations recommenced on 24 February 2020 and steadily
increased such that underground mining reached 100% of
budgeted rates by mid-March 2020 and processing operations
by late March 2020.
As a preventative measure to protect the Caijiaying Mine
neighbouring villages and townships from Covid-19
infection, workers and contractors were prevented from
returning to the Caijiaying Mine immediately following
the 2020 Chinese New Year Holiday, and thereafter strict
quarantine requirements were imposed. Since the 2020 year
end, entry restrictions to the Caijiaying Mine have been
further strengthened and extensive testing implemented so
In January 2021 the central Chinese Ministry of Natural
that to date, there have been no positive cases of Covid-19
Resources (the “MNR”) published its formal list of mines
reported at the Caijiaying Mine. The Company continues
operating in China which have passed the national level
to work closely with the local PRC authorities to prevent
green mine assessment, with the Caijiaying Mine occupying
Covid-19 infiltrating the Caijiaying Mine.
the first position on the list.
16
Griffin MininG LiMited Production
• Silver metal in concentrate produced was 292,301 ozs
Production results for the Caijiaying Mine in 2020 can be
summarised as follows:
• Ore mined of 854,566 tonnes (2019: 862,029 tonnes);
(2019: 344,228 ozs); and
• Lead metal in concentrate produced was 1,428 tonnes
(2019: 1,219 tonnes)
• Ore hauled of 825,412 tonnes (2019: 925,903 tonnes);
Operational developments
• Ore processed of 822,058 tonnes (2019: 930,613 tonnes);
Underground development work in 2020 was primarily
Whilst metal in concentrate recoveries were broadly
maintained, optimising underground stope scheduling,
pillar recovery and maximising economic extraction resulted
in a planned rise in the combined zinc-gold equivalent head
grade to 6.2% in 2020 from 5.5% in 2019.
As a result of the lower tonnes mined and processed:
• Zinc metal in concentrate produced was 32,472 tonnes
(2019: 37,413 tonnes);
focused on developing future stoping horizons between the
1175m RL and 1000m RL levels with 1080m RL, 1040m
RL and 1000m RL levels being developed in 2020 for
production in 2021.
Capital development in 2020 totalled 4,510 metres and
operational development totalled 4,459 metres compared to
7,178 metres and 3,385 metres respectively driven in 2019.
The lower capital metres driven in 2020 was due to the
critical completion of development of the North and South
• Gold metal in concentrate produced was 11,250 ozs
declines in late 2019.
(2019: 17,768 ozs);
20 Tonne Haulage Trucks
17
RepoRt and accounts 2020 Caijiaying (contInued)
The programme to further modernise the Caijiaying
planned to enhance remote bogging capabilities with two
Mine continued throughout 2020 with the 3rd Stage PFA
new underground loaders in 2021.
approval work, Green Mine Certification, ventilation
upgrade programme and other numerous upgrades.
In 2020, new electronic detonators were introduced with the
safety and mining teams together with the on-site mining
A key focus for 2020 was the completion of the installation
contractor collaborating with the detonator manufacturer
and commissioning of the main ventilation exhaust fan
and the Chinese Public Safety Board to ensure their safe
as part of the ventilation upgrade project (see pages 24 &
and effective use for both development and production
25). For the primary ventilation airways, a Central Fresh
blasting purposes.
Air Shaft, Underground Return Airway Shaft, Central
Stoping Vent Rise and two Northern Stoping Vent Rises
Zone II
were
installed. The Main Ventilation Shaft primary
fan and the corresponding backup power arrangement
were also installed. A new Howden primary exhaust
fan was commissioned in the second quarter of 2020
On 28th December 2020, a new mining licence covering
both the Zone II and Zone III areas was approved and
issued by the MNR.
increasing the exhaust capability to 250 cubic metres per
The magnitude of
this accomplishment cannot be
second, significantly enhancing ventilation control and
diminished. This major milestone was finally reached after
environmental safety of the underground workings.
Significant other infrastructure was installed that will be of
benefit over the life of the Caijiaying Mine including at the
1000m RL a new pump station, new electrical substation and
8 years of lengthy and arduous document preparation
and written submissions which continually needed to
accommodate a significant number of legislative and
regulatory changes throughout that time.
new emergency refuge chamber. These were all required
The new mining licence allows for the mining of significant
as part of the safety production requirements for the lower
additional resources. The granting of the 3rd Stage Zone III
Zone III PFA approvals.
The Paste Fill plant commissioned in September 2019
was fully utilised in 2020, thereby limiting the storage
requirements for tailings facilities. Backfilling methods
consist of cemented paste backfill with secondary stopes
filled with generated waste rock material.
PFA Permit will increase the annual mined ore from Zone
III to 1.1 million tonnes in 2021, but with the increased
ore accessed from Zone II, this will increase to over 1.5
million tonnes per annum in 2022, increasing as more
capital development is completed. No additional capital is
required for any above ground processing facilities which
were upgraded and completed some time ago whilst waiting
A new 40 tonne low emission boiler has been installed as
for the new mining licence.
part of the upgrade to the Caijiaying Mine’s heating system
and to limit emissions at the Caijiaying Mine. As well as
reducing any emissions the low emission coal boiler has an
automated coal feeding system negating the necessity to
manually feed coal reducing the need for manual labour and
increasing safety.
A new Manitou lifting device, a new underground loader
and a 20 tonne haulage truck with a fully enclosed cabin
were acquired in 2020. It is planned to acquire a further two
20 tonne haulage trucks in 2021 to increase haulage capacity
aided by the one-way traffic system underground with the
completion of the North and South Declines. In addition,
the Third Brigade is expected to update its fleet in 2021
with a new fit for purpose lifting device, a new electric over
hydraulic production drill rig, a new single boom electric
over hydraulic development drill rig and a new electric over
hydraulic ground support installation drill rig. It is also
18
Griffin MininG LiMited sustainability, environment and loCal Community
SUSTAINABLE DEVELOPMENT POLICY
STAKEHOLDER COMMUNICATION
Safety and occupational health as well as care for the
Griffin believes that establishing a strong and trustworthy
environment are central to Griffin’s values. Griffin endeavors
relationship with its stakeholders is essential to the Group’s
to achieve economic, social and environmental benefits
sustainable development. Actively understanding and
to its stakeholders while establishing environmentally
responding to the needs of stakeholders is the cornerstone
friendly (‘green”) operations and developing a circular and
of Griffin’s sustainable development management. The
low-carbon economy and striving to realise high-quality
Company and its subsidiaries regularly communicates
sustainable development.
with its stakeholders to understand their concerns and act
accordingly.
Stakeholders
Key Issues
Communication
Government and regulatory agencies
Compliance with laws, regulations
and policies
Carry out community projects and
cooperation with government agencies
Corporate governance
(See separate corporate governance
report pages 34 & 35)
Safety and environmental protection
Daily communication and reporting
Shareholders and investors
Sustainable development governance
Human rights policy disclosure
Regular reporting (see corporate
governance report pages 34 & 35)
Anti-slavery policy, equal opportunities
employer
Anti-corruption
Bribery and corruption policy
Employees and their families
Salary and benefits
Employee performance interviews
Training and development
Staff representative conference
Health and safety
Regular safety reporting, safety
meetings and safety inductions
Suppliers/contractors
Customer service
Dedicated procurement department
Product quality
Independent assay and moisture checks
of concentrate sold
Community
Community investment
Involvement in local community
Community benefits
Environmental protection and
ecology
Local community support, including
infrastructure, poverty alleviation,
schooling
Care and protection of local
environment with minimal discharges
19
RepoRt and accounts 2020 sustainability, envirOnment and lOCal COmmunity (contInued)
ENVIRONMENTAL RESPONSIBILITY
• Funding the state endorsed China “greening” project
As a responsible corporate citizen, Griffin not only
abides by local regulatory requirements but seeks to
apply best worldwide practices regarding the protection
of the environment. Hebei Hua Ao strictly abides by the
Environmental Protection Law of the People’s Republic of China,
including the planting of trees by local villagers in the
Caijiaying Mine area;
• Awarding of state endorsed China “green mine”
certification;
the Environmental Impact Assessment Law of the People’s
• Approval from the relevant authorities to increase the
Republic of China, and the Cleaner Production Promotion Law
capacity of the dry tailing’s storage facility without
of the People’s Republic of China and other relevant laws and
an increase in the footprint of the facility via modern
regulations. In doing so, Griffin is committed to conserving
design practices and with a new tailings facility being
resources and protecting the environment by reducing the
constructed in 2021. Crucially, these facilities are
impact on the environment and natural resources. Griffin
“dry” compared to those that are “wet”and have failed
conducts its operational activities in strict accordance
internationally;
with the requirements of laws and regulations with the
establishment of internal environmental monitoring plans,
the use of professional testing agencies to strictly monitor
• Recycling of dry tailings by transportation to a local
brickwork for use as base material in brick manufacturing;
air emissions, wastewater, solid waste discharge to enable the
• A dedicated waste collection building to accumulate
timely resolution of any issues that might be encountered.
Caijiaying Mine waste prior to sorting, collection and
Griffin continues to improve related management systems
recycling;
and technical standards for energy management, improve
• The planting of 60 landscape trees outside the main
resource utilisation rates and maximise the efficiency of
resources and energy consumption. Such practices include:
• Controls to prevent the discharge of waste into the
environment;
•
Sewage treatment plants at the mine and camp sites to
deal with all effluent produced;
gate and 30,000 elm trees and 3,000m² of grass planting
around the Caijiaying Mine as part of local Chinese
Environmental Protection Agency greening project;
• Planting of Mongolian scotch pine trees over an
area of 3,869m² to suppress dust and prevent surface
degradation. In addition, paving stones have been laid
with grass seed to cover an area of 575m² and 743 m² of
•
All water from the Caijiaying Mine and accommodation
paving stones without grass seeding;
site being recycled;
• The construction of a new hazardous waste storage
•
Boiler flue gases being treated by a dust and sulphur
facility;
extraction system to prevent the emission of pollutants
into the atmosphere being enhanced with a new 40
tonner low emission boiler being installed;
• Waste rock and mill tailings being used for backfilling
underground stope voids. This minimises the mine
footprint by reducing the need for larger tailings and
waste storage facilities;
• Noise, dust and blasting vibration from operations
being strictly controlled;
•
Installation of drainage trenches around the ROM pad,
waste dump and main access gate area to ensure effective
water run-off and protection against soil erosion;
• Timely renewal of environmental permits including
water usage permits, radioactive source safety permits
and waste discharge permits;
•
Installation of a Total Suspended Particles online
monitoring systems continually monitored by the
Municipal Environmental Protection Authority
• Decommissioning and rehabilitation work on Tailings
Information Centre;
Dams 1 & 2. This work includes battering the waste
dump slope, backfilling, topsoil sheeting and planting of
vegetation to international standards and in compliance
with PRC environmental regulations;
• Heavy Metal on-line monitoring equipment replaced
by more modern systems and monitored on-line by
the Municipal Environmental Protection Authority
Information Centre;
20
Griffin MininG LiMited •
Installation of additional fencing and dust cannons on
particulate emissions meet the requirements of China’s
the ROM pad to further control dust and any heavy
national standard “Comprehensive Discharge Standard of
metal emissions;
Air Pollutants” (GB162967-1996).
• Upgraded dust collection system in the screening house
with new dust collectors effectively reducing fine ore
loss and dust discharge;
WASTEWATER TREATMENT
Waste water is mainly domestic sewage, production waste
water and drain water from the mine. After treatment,
• The completion and acceptance of 2020 clean
domestic sewage and plant wastewater can all be reused for
production targets with the targeted reduction in heavy
production, with the drain water treated on site and then
metals confirmed;
• Mist cannon and vacuum trucks for dust suppression;
used for mineral separation. In 2020, all production waste
water was recycled achieving waste water “zero discharge”.
• The blending of semi-coke coal with common coal for
WASTE STORAGE AND DISPOSAL
use in boilers to reduce the discharge of smoke, sulphur
Non-hazardous waste produced mainly includes waste
dioxide and nitric oxide;
• Greening of site and camp accommodation areas
including vegetable gardens and flower beds; and
• Ground hardening of main passageways around the
Caijiaying surface facilities.
WASTE GAS TREATMENT
Griffin strictly abides by China’s air emissions standards, and
strictly controls air pollutants such as sulphur dioxide and
nitrogen oxides generated during mining and processing
by installing waste gas treatment devices to ensure that air
pollutants emissions meet relevant standards. The smoke
and dust generated by heating boilers and hot blast stoves
are efficiently treated by a series of desulphurisation and
dust removal equipment such as bag filters to ensure that
the pollutant emission concentration in the exhausted gas
meets the requirements of China’s “Boiler Air Pollutant
Emission Standard” (GB13271-2014). The main dust
generating areas such as crushing and screening at the mill
rock and tailings. All waste rock produced is backfilled to
the underground open stopes resulting 100% utilisation
of mined waste rock. Part of the tailings generated is used
for underground paste fill while the remainder is used for
making bricks or stored in the tailings facility. This results
in total utilization and safe disposal of all wastes.
Griffin strictly abides by China’s national standard
“Hazardous Waste Storage Pollution Control Standard
(GB18579-2001)” and has formulated internal documents
such as “Hazardous Waste Temporary Storage Management”,
“Hazardous Waste Ledger Management” and “Hazardous
Waste Incident Report”. All hazardous waste generated is
disposed of by a qualified third party. In accordance with the
PRC government’s environmental protection requirements,
Hebei Hua Ao has installed an online monitoring system
for hazardous waste transfer and connected it directly to
the National Environmental Protection System to prevent
illegal disposal of hazardous waste.
RESOURCE USAGE
are equipped with a sealed cover and bag filters with a dust
In 2020, Griffin established a taskforce to address complex
removal efficiency of 98.65%. The resulting emissions
technological challenges. Led by the Caijiaying General
meets the requirements of China’s national standard
Manager, it is mainly responsible for the coordination of
“Pollutant Emission Standard of Lead and Zinc Industry “
scientific and technological research and innovation. It
(GB25466-2010 ).
In addition, dust removal devices are set up in Hebei
Hua Ao’s workshops. Areas affected by uncontained dust
emissions are controlled by setting up dust nets, spraying
water and regular cleaning. Multiple total suspended
continues to optimise mining methods to maximise the
mineral resource utilisation. Griffin actively promotes
digital, modern and intelligent mining by formulating a
scientific and technological innovation management reward
system and annual incentive plan.
particulate matter online monitors have been installed
Griffin attaches great importance to energy conservation
in the mining area to ensure that the total suspended
and emission reduction with a series of positive actions
particulate matter and the concentration of unorganised
implemented in 2020.
21
RepoRt and accounts 2020 sustainability, envirOnment and lOCal COmmunity (contInued)
• Formulated a “Water Conservation Management System”
GREEN MINE CONSTRUCTION
which is strictly implemented and records water
consumption in real time. Further employees’ awareness
of water conservation is cultivated in daily work and life.
• Strict adherence to the “Cleaner Production Promotion
Law of the People’s Republic of China” and other relevant
laws and regulations, actively carrying out cleaner
production and setting up a clean production review
team. In 2020, Hebei Hua Ao replaced the metal
halide lamps in the workshop with LED lamps. After
the replacement, the annual power consumption was
reduced by 51,480 kWh.
• An “Energy Conservation and Emission Reduction Work
Leading Team” was established to make relevant
assessments and promote energy conservation. Griffin
established a resource utilisation assessment system, set
up energy consumption targets for each workshop and
team and incorporated the related KPIs into the annual
In 2020, Griffin actively enhanced its green mine operation
and compiled the “Green Mine Self-Assessment Report” and
“Green Mine Building Implementation Plan”. In doing so it
successfully passed the national green mine review in China
and was listed in the PRC national green mines list.
For the green mine implementation programme, Griffin
established a green mine construction team headed by the
Caijiaying General Manager. This team ensured that all
the tasks were properly and timely completed for green
mine certification. Further, Griffin formulated the “Mining
Geological Environmental Protection” and assigned specialists
to evaluate each key process and point to enhance ecological
and environmental governance, train employees to improve
the awareness of sustainable utilisation of the mineral
resources and apply an effective system to ensure a green
mine development.
assessment while encouraging employees to build up
TAILING FACILITIES CLOSURE
a sense of responsibility for energy conservation and
environmental protection. All of these measures ensure
the success of Griffin’s energy conservation and emission
reduction work.
ENVIRONMENTAL EMERGENCY
RESPONSE PLAN
In order to actively respond to environmental emergencies,
Hebei Hua Ao commenced the closure and re habilitation of
the Tailings Facilities 1 and 2 in July 2020 and successfully
completed this in November, 2020. Both tailing facilities’
closures and rehabilitation included a number of complex
works such as a reservoir area treatment, slope greening,
and a safety facilities set-up, with a total investment of more
than $14.2 million.
a “One Plant, One Policy” Implementation Plan for Emergency
ENVIRONMENTAL RECOGNITION
Response to Heavy Pollution Weather has been formulated and
Griffin’s environmental best practices have been recognised
strictly implemented during these events. Environmental
in the past by Chinese Government authorities with Hebei
risk assessments are regularly undertaken in accordance with
Hua Ao being presented with the National Environmental
relevant Chinese regulations, “Action Plans for Environmental
Award and the Mine Development Outstanding Achievement
Emergencies”, which are filed with the local Environmental
Award at successive China Mining Conferences.
Protection Agency.
In January 2021 the central Chinese MNR published its
formal list of mines operating in China which have passed
the national level green mine assessment, with the Caijiaying
Mine heading the list.
HAZARDOUS CHEMICALS
MANAGEMENT
Griffin complies with the “Regulations on the Safety
Management of Hazardous Chemicals”, “Regulations on the
Management of Precursor Chemicals”, “Measures for the
Public Security Management of Precursor Explosive Hazardous
Chemicals” and other relevant laws and regulations and
realises professional management of hazardous chemicals
through dedicated storage facilities for hazardous chemicals.
22
Griffin MininG LiMited Key Environmental Indicators
Emissions
Environmental Performance Indicators
Nitrogen oxides (tons)
Sulphur dioxide (tons)
Smoke and dust (tons)
Wastewater discharge (tons)
Wastewater discharge intensity (tons/RMB million)
Hazardous waste safely disposed of (tons)
General solid waste generation (tons)
• Nitrogen oxides, Sulphur dioxide, and smoke mainly emanates from heating boilers.
• Hazardous waste is mainly from waste mineral oil, and waste oil drums.
• General solid waste is mainly from tailings.
Energy and Resources Consumption
Environmental Performance Indicators
Diesel consumption (tons)
Coal consumption (tons of standard coal)
Purchased electricity (MWh)
Total water consumption (10,000 tons)
2020
11.00
6.89
1.80
0
0
36.11
646,431
2020
293.87
2,818.26
51,658.40
40.25
EMPLOYEES’ RIGHTS
Hebei Hua Ao values its employees by adhering to “Talents
are the First Resource” policy. This insists on a people-
oriented principle and protection of employees’ basic
rights and interests as well as mutual development between
employees and the Company. This is an important part of
Griffin’s overall sustainable development by continuing to
optimise employee talents, improve the overall quality of
employees and committing to building a professional and
ethical team with a high sense of responsibility.
EMPLOYEE MANAGEMENT POLICY
Griffin is an equal opportunities employer and Hebei Hua
Ao strictly complies with the Labour Law of the PRC, the
Labour Contract Law of the PRC, the Law of the PRC
on the Protection of Women’s and Children’s Rights and
other relevant laws and regulations. Griffin has established
a number of employee management systems and procedures
to protect the legitimate rights and interests of employees,
including recruitment and dismissal, compensation and
promotion, working hours, holidays, equal opportunities,
diversification and other employee benefits. Griffin has
contracts with employees in accordance with all laws and
regulations to ensure that all employees are given equal
opportunities for career development and to build a
harmonious labour relationship.
Hebei Hua Ao implements an 8-hour working day system
in accordance with PRC law and stipulates that the average
working hours of employees should not exceed 40 hours per
week. Due to the nature of some activities, a special working
hours system may be implemented after obtaining approval
from the relevant departments.
Griffin offers competitive salary and welfare benefits to its
employees according to the nature of the job. An employee
23
RepoRt and accounts 2020 24
Griffin MininG LiMited New North Ventilation Shaft with Caijiying Mine Site in distance providing perspective of Zone III
25
RepoRt and accounts 2020 sustainability, envirOnment and lOCal COmmunity (contInued)
whose work exceeds regular working hours will be offered
• Regular production safety meetings;
additional compensation or compensatory leave. Hebei Hua
Ao implements a system of 20 days of continuous work and
10 days of continuous leave. Hebei Hua Ao reimburses travel
expenses between the Caijiaying Mine and the employees
home.
Griffin advocates a diverse workforce and does not
discriminate on the grounds of gender, age, nationality,
race, religious beliefs, and physical condition in either
recruitment, training, selection, salary and promotion.
Griffin is against any forms of slavery, forced labour or child
labour and will not deal with any party which it believes
engages in such practices.
• Training on safe production to employees, contractors
and visitors;
• Occupational hazards health checks before, during and
after work;
• Regular safety meetings with all contractors;
•
Implementation of and regular upgrading of “Six
Systems” including emergency sheltering, monitoring
and control, underground personnel positioning,
communication, wind pressure self-rescue, and water
supply and rescue; and
• Regular underground drainage system checks to prevent
HEALTH AND SAFETY OF EMPLOYEES
the danger of underground surges.
The health and safety of the Group’s employees is of
paramount importance. All Group companies abide by
the relevant laws and regulations of their country of
incorporation and operation, including the Law on the
Prevention and Control of Occupational Diseases of the
PRC and the Measures for Supervision and Administration
of Employer’s Occupational Health Surveillance. In
particular, Hebei Hua Ao has established a sound and
safe production management system and improved the
emergency plans for production safety accidents to reduce
the risks of occupational hazards.
SAFETY MANAGEMENT
Mining is inherently dangerous and without proper safety
management and procedures there is a degree of risk of
injury, potentially fatal, to anyone in the mine or processing
facilities. Griffin is focused on the occupational health
and safety awareness of its employees, contractors and all
those visiting the Caijiaying Mine and surface facilities.
A safe working environment is the top priority. Referring
to industry practices and regulatory requirements, Griffin
has formulated a comprehensive instruction on health and
safety and is committed to building a “dual control” safety
management system that is being continually enhanced.
In order to implement the safety management policies and
ensure the occupational safety of employees, contractors
and those visiting, safety management operational practices
include the following:
• Emergency rescue plan and organised emergency drills
and exercises on a regular basis;
In 2020, Hebei Hua Ao conducted 3 major safety inspections.
A total of 395 hidden risks were identified and 395 were
rectified. Relying on a meticulous safety management
system, the incident rate of all types of accidents decreased
significantly this year. The total frequency of recordable
injury accidents per million working hours was 4.5, which
was 8.8 lower than the result in 2019.
EMPLOYEES’ OCCUPATIONAL HEALTH
Griffin strongly values the prevention and control of
occupational diseases while constantly upgrading the
occupational health protection equipment and facilities
to improve the production and working environment of
employees. Hebei Hua Ao provides annual occupational
health check-ups for employees who are exposed to
occupational hazards to ensure their health and safety.
CONTRACTORS SAFETY MANAGEMENT
In 2020 Hebei Hua Ao incorporated three contractors into
its safety management system and unified management
structure. A “Safety Production Management Agreement”
and “Safety Liability Letter” was signed with all contractors
stipulating that everyone entering the mine site must
wear protective equipment while cautiously fulfilling their
responsibilities of safe production. In addition, mine safety
education and training was provided for new employees
of contractors with safety education and training for all
contractors once or twice a month to continuously improve
contractors’ safety awareness.
26
Griffin MininG LiMited Employee Structure of Hebei Hua Ao Mining in 2020
At 31 December 2020, Hebei Hua Ao employed the following personnel:
Category
Employee basic information
Number of employees
Proportion
Total number of employees
New employees joined in 2020
By gender
Male
Female
By management level
Management Personnel
By age
General Personnel
30 years of age or under
31 to 50 years of age
Above 50 years of age
438
49
377
61
23
415
33
262
143
100%
11.2%
86.1%
13.9%
5.3%
94.7%
7.5%
59.8%
32.7%
COVID-19 CONTROL AND PREVENTION
the Company invested RMB 350,000 ($52,000) in employee
In order to carry out better prevention and control of
Covid-19 during the pandemic, Hebei Hua Ao established
an epidemic prevention and control group headed by
the Caijiaying General Manager and formulated the
“Covid-19 Prevention and Control Plan”. This clarified
work responsibilities and set out a series of procedures
training. The training coverage rate reached 100%. Training
conducted in 2020 included:
• Management personnel
training: 6 management
personnel received PRC safety officer training and
certificates.
such as personnel screening, site disinfection and other
• Technician training: 45 technicians received PRC skill
controls. Hebei Hua Ao guaranteed sufficient stocks of
training and relevant certificates.
hazard prevention materials which enabled operations to
continue with minimal disruption. In addition to employee
health and safety protections, a special shuttle bus was
sent to Wenzhou City in Zhejiang to return employees
• Safety training: Internal safety training was provided to
438 employees.
after the Spring Festival. Hebei Hua Ao maintains active
SUPPLIER MANAGEMENT
and continual communication with local governments and
provides free nucleic acid testing for all employees returning
to work.
Wherever possible, Griffin Group employees were
encouraged to work from home in compliance with local
regulatory requirements.
CAREER DEVELOPMENT AND
TRAINING OF EMPLOYEES
Griffin values the training and development of all employees.
It has formulated scientific promotion channels and flexible
employee training systems to support employees’ career
development and improve employees’ capabilities. In 2020,
Suppliers are one of the important cornerstones of our
sustainable development. To ensure that supplier activities
comply with the requirements of local regulatory authorities
and our selection criteria, a mature supplier management
system has been established that strictly controls the entire
process of supplier access, evaluation and subsequent
management.
When establishing procurement contracts for equipment,
building materials, steel, chemicals and other products,
Griffin sets clear environmental and safety management
requirements for suppliers, stipulating that they must
strictly comply with national and local environmental and
safety laws and regulations in production and operating
27
RepoRt and accounts 2020 sustainability, envirOnment and lOCal COmmunity (contInued)
activities. Product packaging must be solid and clearly
The following measures are undertaken in the efficient
marked. The supplied goods must be safe and neatly package
production of good quality concentrate:
and delivered to the designated place safely. In addition, a
commitment letter on “Illegal Employment of Employees”
from the suppliers is requested, requiring them to strictly
comply with the Constitution of the People’s Republic of China,
the Employment Contract Law of the People’s Republic of China,
the Law of the People’s Republic of China on the Protection of
Minors and the Provisions on Prohibition of Using Child Labour.
Griffin strictly prohibits the employment of child labour
and late salary payment to their employees so as to prevent
social and environmental risks within the supply chain.
• Strict maintenance plans to ensure that equipment is
always in good and reliable condition;
• Ongoing
improvements to the flotation process,
including optimisation of system controls, enhancement
of process stability resulting in better recovery of lead,
zinc, gold and silver;
• PLC control systems to further ensure the stability of
processing operations;
• Ongoing technical training to employees to improve
their capabilities and their ability to deal promptly and
CUSTOMERS AND PRODUCT
safely with all emergencies;
RESPONSIBILITY
Quality Control
With strict production management and quality control,
every effort is made to ensure the production of high quality
zinc and lead concentrates that satisfy customers’ needs. The
extraction of all lead from the Zinc conentrate produces a
separate lead concentrate containing precious metals and
ensures that a highly desirable lead free zinc concentrate is
produced.
• Samples taken every two hours during processing to
correct variances and ensure the stability of processing;
and
• A combination of internal and external inspections for
assay analysis to ensure the accuracy of all assay data.
Protection of Rights and Interests of Customers
Griffin takes a responsible and proactive approach to
building long-term, harmonious and stable customer
Underground Refuge Chamber at the Caijiaying Mine 1000m RL for 100 personnel
28
Griffin MininG LiMited relationships and endeavours to resolve all customer
Community Investment
claims promptly. In 2020, Hebei Hua Ao did not receive
any complaints or have any returns regarding concentrate
quality nor did it recall any concentrate sold due to safety
or health issues.
COMMUNITY RELATIONS AND SOCIAL
INVESTMENT
Griffin through Hebei Hua Ao has invested heavily in the
local community. This includes working with the local
community towards eliminating poverty and improving
people’s livelihood. Griffin believes that the enterprise and
community development are closely related, combining
corporate strengths with community needs. Griffin
Community communication is seen as an effective way
to build trust with local community people and achieve
harmony and co-prosperity between the Company and the
community. As well as poverty alleviation and support for
local cultural events this has included:
• The construction and maintenance of a new water bore
and water supply;
• The construction and maintenance of a sealed road
from San Hao township to the Caijiaying Mine area;
• 500 head of cattle to Caijiaying Village to successfully
create a dairy and cattle farm.
actively carries out community improvements, supports
In 2020, Hebei Hua Ao provided Rmb55,800 for the
local institutions and provides charitable support where
maintenance of the water pipeline system in Caijiaying
needed. By establishing a “Community Development Plan”
Village, No. 3 Township in Zhangbei County, Zhangjiakou
and other support, Griffin has formulated community
City, Hebei Province. Hebei Hua Ao assisted local people
development plans in areas such as poverty alleviation,
in repairing their houses and address any potential impact
education, medical care, industrial support, infrastructure
of blasting vibrations and other disturbances on their
construction, disaster relief and traditional culture support.
properties, with a total investment of more than Rmb12
These are considered and implemented as a way to promote
million. In addition, Hebei Hua Ao provided pension
harmonious economic and social development and to be an
subsidies to 386 elderly people in Xiaobazi Administrative
excellent corporate citizen of the PRC.
Poverty Alleviation
In order to assist and implement the decisions and directives
of the Chinese government to reduce poverty, in accordance
with the requirements of the Leading Group of Poverty
Village in Zhangbei County. The total fund was more than
Rmb550,000. 500 head of cattle were paid for and provided
to Caijiaying village to successfully create a dairy and cattle
farm to ensure a more sustainable annual income less reliant
on the seasonality of crops grown in the short summer
months.
Alleviation in Hebei Province, Griffin has implemented
In 2020, Hebei Hua Ao donated money and Covid-19 relief
a poverty alleviation plan in conjunction with the local
materials for local epidemic prevention and control. During
community. This includes pensions and other financial
the outbreak, masks, food, and other epidemic prevention
support as well as non-financial donations to local people.
materials were donated to No. 3 Township in Zhangbei
Education
Since the commencement of operations at the Caijiaying
Mine, Hebei Hua Ao has been providing financial support
County, at a cost of Rmb 33,400. A further Rmb 100,000
was donated to support the recovery from Covid-19.
These actions have won unanimous praise from the local
government and residents.
to the only elementary school in No.3 Township, Zhangbei
It is estimated that the Caijiaying Mine currently provides
County, Zhangjiakou City, Hebei Province. This includes
direct and indirect employment to over 1,000 Chinese
the establishment of the “Hebei Hua Ao Hope Scholarship”
nationals.
to encourage local high school graduates to enter university.
The “Huaao Hope Scholarship” was established with
an annual investment of Rmb 100,000, and is specifically
implemented and managed by the Zhangbei County Hope
Project Leading Group. In 2020, a total of 28 college
students were granted this special scholarship, with a total
amount of Rmb 73,000.
During 2020, Hebei Hua Ao paid Rmb 95 million ($14.5
million) (2019: Rmb 116 million) in taxes, royalties, social
security fees and other duties to Chinese Governmental
authorities and agencies. It is recognised as the largest tax
payer in the local Zhangbei County and one of the largest
in Zhangjiakou City prefecture.
29
RepoRt and accounts 2020 30
Griffin MininG LiMited Atlas Copco Underground Long Hole Production Drill Rig
31
RepoRt and accounts 2020 FinanCial results
In 2020, the Company and its subsidiaries (together the
main reflects less ore mined, hauled and processed with
“Group”) recorded;
• Revenues of $75,403,000 (2019: $82,267,000);
• Operating profits of $15,148,000 (2019: $14,225,000);
operations impacted by restrictions to contain the Covid-19
pandemic in the first quarter. Additional cost savings were
achieved in mining and haulage thereby reducing unit costs
per tonne of ore. Despite the reduction in tonnes of ore
mined and processed, non-cash depreciation charges rose
• Profit before tax of $14,515,000 (2019: $11,712,000);
with additional capital costs.
• Profit after tax of $8,910,000 (2019: $6,084,000); and
• Basic earnings per share of 5.16 cents (2019: 3.52 cents).
Administration expenses fell $1,915,000 (9.9%) from
$19,433,000 in 2019 to $17,518,000 in 2020. This reduction
reflects efforts to contain costs across the Group during
Despite interruptions to operations in the first quarter of
the Covid-19 pandemic, despite additional work on the
2020 with restrictions imposed by the Chinese authorities
application for a mining licence at Zone II and Green Mine
to contain the Covid-19 pandemic, the Group recorded a
certification.
6.5% increase in operating profits on that recorded in 2019,
primarily as a result of higher zinc metal prices received and
reduced costs.
Turnover of $75,403,000 was down $6,864,000 (8.3%) on
that achieved in 2019 of $82,267,000. This reflects zinc in
concentrate sales down $2,532,000 (4.6%) with 5,535 tonnes
(14.6%) less zinc in concentrate sold at average prices of
$174 per tonne (11.8%) higher than in 2019, as the Group
benefited from rising market prices and falling smelter
treatment charges. Lead and precious metal in concentrate
sales were down $3,851,000 (12.9%) on 2019 with 6,494
ozs (36.7%) less gold in concentrate sold at average prices
of $441 per oz (33.4%) higher than 2019 and 41,337 ozs
(12.4%) less silver in concentrate sold at average prices of
$3.9 per oz (28.3%) higher than 2019.
In 2020, metal in concentrate sales were:
•
Zinc 32,276 tonnes (2019: 37,811 tonnes);
• Gold 11,218 ozs (2019: 17,712 ozs);
Foreign exchange gains of $22,000 (2019: losses $93,000)
were recorded in 2020, mainly on a strengthening of the
Renminbi.
Interest of $108,000 (2019: $171,000) was received on bank
deposits in 2020 whilst interest of $111,000 (2019: $51,000)
was paid on short term bank loans. Finance interest on the
lease of the dry tailings facility at Caijiaying and the London
office totalling $171,000 (2019: $326,000) was incurred
in 2020. Deemed interest on discounted rehabilitation
provisions of $77,000 (2019: $Nil) was charged in 2020.
Losses on the disposal of $1,129,000 (2019: $305,000) were
recorded with equipment being replaced to meet higher
Chinese environmental standards.
Income taxes of $5,605,000 (2019: $5,628,000) have been
charged in 2020. This includes a deferred taxation charge of
$424,000 (2019: $380,000), and PRC withholding taxes on
dividend distributions and fees of $232,000 ($50,000).
Basic earnings per share in 2020 was 5.16 cents (2019: 3.52
• Silver 291,756 ozs (2019: 333,093 ozs); and
cents) and diluted earnings per share was 4.88 cents (2019:
• Lead 1,425 tonnes (2019: 1,221 tonnes).
Average prices achieved in 2020 were:
3.24 cents).
Cash generated from operations of $24,398,000 (2019:
$21,639,000) have been used in further developing the mine
•
Zinc metal per tonne of $1,645 (2019: $1,471);
and facilities.
• Gold metal per oz of $1,759 (2019: $1,318);
Attributable net assets per share at 31 December 2020 was
$1.35 (2019: $1.24).
• Silver metal per oz of $17.70 (2019: $13.80); and
• Lead metal per tonne of $1,339 (2019: $1,575).
Cost of sales of $42,737,000 in 2020 were down 12.1% on
that incurred in 2019 of $48,609,000. This reduction in the
32
Griffin MininG LiMited strategiC review
OVERVIEW
ACQUISITIONS AND FURTHER
The objective of the directors and management is to
PROJECTS
Whilst the Company continues to develop the Caijiaying
Mine and explore the surrounding area, it also continues
to search for, and investigate, other potential acquisitions
of both gold and base metals projects that may be brought
into long term, economic production for a capital cost
that provides a substantial and justifiable return on equity
to shareholders. Relatively new geological, geophysical
and geochemical techniques, aided by new equipment, all
sourced or discovered in Australia, Europe and/or the USA,
have expanded the Company’s search criteria to include
virgin, exploration ground. Any found of value may be sold,
joint ventured or offered in a separate vehicle to existing
Griffin shareholders or retained by the Company and
developed for existing shareholders.
To affect this strategy, in 2020, the Company further
expanded the scope and activities of China Zinc to
encompass this corporate goal.
In addition, a large number of potential mining projects
have been analysed worldwide. None have been successfully
consummated for a myriad of reasons including country
risk, negative findings during due diligence, a questionable
return calculated for the risk shareholders would need to
accept in funding the project to production, the overall
project risk profile and various other deficiencies in grade,
tonnes, metallurgy, depth and difficulty in mining.
ensure the long term sustainability of the Company and its
business to benefit its shareholders and other stakeholders.
To achieve this objective, the directors and senior executives
seek to add value, manage risks and minimise costs whilst
pursuing economic returns commensurate to the risk taken
pursuing the following strategy.
In view of the significant potential of the Caijiaying Mine
and surrounding areas and given the Company’s knowledge
and expertise in China, the directors and management
have focused on the further development of the Caijiaying
Mine, investigation of prospective areas near the Caijiaying
Mine and other potential projects in other provinces of
China. In addition, the directors and senior executives
evaluate other mining companies and projects worldwide
to ascertain whether any acquisition can be made which
has the possibility of matching the returns provided by the
Caijiaying Mine.
CAIJIAYING
The Caijiaying Mine’s metal production capability has been
augmented with continued extensive exploration, expansion
of the mill processing facilities (including grinding and
flotation circuits) and ongoing underground infrastructure
development. Exploration has been focussed on identifying
geological targets and evaluating the potential for significant
additional resources. Whilst the existing Mineral Resource
estimate confirms the availability of extensive resources
at the Caijiaying Mine for increased production, further
resource additions will provide an opportunity to further
increase the Caijiaying Mine’s production profile. This
includes more extensive exploration not only at Zones II
and III, but also at Zones V & VIII, which require extensive
further drilling to fully understand the size and nature of
these orebodies. Whilst the grant of a new mining licence
over Zones II and III permits production to be raised to 1.5
million tonnes per annum, further expansion of operations
will require further licences and permits from various
Chinese authorities which are proving increasingly complex
and time consuming to obtain.
33
RepoRt and accounts 2020 Corporate governanCe
Griffin is incorporated in Bermuda, a jurisdiction which
• Prior approval of capital and other significant
does not have a formal overarching corporate governance
expenditure;
code. Under common law in Bermuda, shareholders are
entitled to have the affairs of the Company conducted
in accordance with general law and the Company’s
memorandum of association and bye-laws. The Company
and its directors have reviewed and considered the
various corporate governance codes and have adopted the
Corporate Governance Code published by the UK Quoted
Company Alliance (“QCA”) and the principles contained
therein. In effect, the directors continue to seek to add
value, manage risks and minimise costs to ensure the long
term sustainability of the Company and its business.
The board of directors (the “Board”) includes a number
of non-executive directors who, with the exception of
Adam Usdan, 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 seeks to meet as regularly as possible within
the confines of recent restrictions imposed to contain
Covid-19 transmissions, and is responsible for the overall
• Preparation and regular review of cash flow forecasts
and funding requirements;
• Regular review and assessment of foreign exchange risk
and requirements; and
• Regular review of commodity prices and assessment of
hedging requirements
The directors recognise the principles in the QCA code and
have applied these where appropriate. In this regard:
• Strategy: In view of the significant potential of the
Caijiaying Mine and surrounding areas and given the
Company’s knowledge and expertise in China, the
directors and management are focused on the further
development of the Caijiaying Mine, investigation of
prospective areas near the Caijiaying Mine and other
potential projects in China. In addition, the Company’s
directors and management continue to evaluate other
mining companies and projects worldwide for potential
acquisitions.
strategy of the Group, its performance, management and
• Shareholder expectations: The Chairman and Finance
major financial matters. All directors are subject to re-
Director maintain regular contact with significant
appointment annually at each annual general meeting of
shareholders and the Company retains an office in
the Company’s shareholders.
The Board has formally established an audit committee
and a remuneration committee. The audit committee and
London as a point of contact for all shareholders and
potential shareholders in order to gauge the needs and
expectations of shareholders in the Company.
remuneration committee reports are given on pages 36 to
• Stakeholders: The Company through Hebei Hua Ao
40. In view of the size of the Company and stability of the
has invested heavily in the local community in China
Board and senior executives, a nomination committee has
and continues to maintain and further implement best
not been established but will be appointed as the need arises.
practices for the protection of the environment and for
As required by Bermuda company law, all the directors are
shareholders in the Company to align their interests with
that of the shareholders.
Various safeguards and checks have been instigated as part of
the Company’s system of financial controls. These include:
the benefit of the local community. Further details are
given on page 29.
• Risks: The Company and its directors have identified
and keeps under consideration the risks facing the
Company and its subsidiaries (“the Group”). These risks
and how they are managed are detailed in the directors’
• Preparation of regular financial reports and management
report on pages 44 to 47.
accounts;
• Preparation and review of capital and operational
budgets;
• Preparation of regular operational reports;
• Board of directors, structure: The Board is headed
by a Chairman, whose services are provided through
a service entity Keynes Capital (see report of the
remunerations committee on pages 38 to 40). The
Company has no Chief Executive Officer.
34
Griffin MininG LiMited Accordingly, the roles of Chief Executive Officer and
• Shareholder communications: In addition to the
Chairman have not been separated as recommended
publication of annual and interim reports, regulatory
by the QCA code for the above reason. The Board also
news releases and maintaining a web site, as
includes a full time executive Finance Director as well as
aforementioned, the Company communicates directly
two non-executive directors.
• Board of directors, skills: The existing Board brings
with major shareholders and maintains an office in
London, in part, as a point of contact with shareholders.
a balance of skills and experience to the Company,
Further details are provided on the Company’s web site
including legal, financial, mining, geological and market
www.griffinmining.com.
expertise. Details of each director are given in the
biographies of each director on page 41.
• Board performance: The
independent directors
regularly consider the effectiveness and performance
of the Chairman and Finance Director and vice-versa.
A remuneration committee has been appointed with a
brief to set performance criteria.
• Corporate culture: Both the Chairman and Finance
Director regularly visit the Group’s operations to meet
with management and other personnel. These visits
have been limited of late because of travel restrictions
to contain the Covid-19 pandemic. The Board meets at
least once a year at the Caijiaying Mine and elsewhere
during the year. The safety of all personnel working
at the Group’s operations is a priority with formal
procedures in place to prevent and report any safety
and environmental issues. The Group will not deal
with any organization or individual which it believes
to be involved with slavery. The Company has formal
procedures regarding the avoidance of bribery and
corruption. The Group engages personnel regardless of
race or gender.
• Governance structures: The Company has appointed
a Chief Operating Officer who reports directly to the
Chairman, who in turn reports directly to the Board.
The Chief Operating officer oversees the Groups
operations with individual department heads reporting
directly to him. The Company has appointed a Chief
Financial Officer in China who reports to both the Chief
Operating Officer and directly to the Finance Director,
who in turn reports to the board of directors. Individual
department managers are able to communicate directly
to the Chairman concerning any issues of concern.
The Board has responsibility for setting the overall
strategy of the Group, its performance, management
and financial matters including, inter alia, the approval
of budgets, significant capital expenditure and financial
reports.
35
RepoRt and accounts 2020 report oF the audit Committee
To comply with Corporate Governance requirements set by
Internal Controls and Risk Management Systems
AIM in 2018 an audit committee was formed comprising
the non-executive directors Dal Brynelsen, Adam Usdan.
The Audit Committee:
and Rupert Crowe, who died on 10 February 2021.
(a) Keeps under review the effectiveness of the Company’s
internal controls and risk management systems; and
THE ROLE OF THE AUDIT COMMITTEE
(b) Reviews and approve the statements to be included in
The Audit Committee assists the Board in its oversight of
the Annual Report concerning internal controls and risk
the Company’s financial reporting, internal control and
management.
risk management. In this regard, the Audit Committee is
charged with carrying out the following:
Whistle blowing
Financial Reporting
The Audit Committee reviews the Company’s arrangements
for its employees to raise concerns, in confidence, about
The Audit Committee monitors the integrity of the
possible wrongdoing in financial reporting or other matters.
financial statements of the Company, including its annual
The Audit Committee ensures that these arrangements
and interim reports, preliminary results and any other
allow proportionate and independent investigation of such
formal announcement relating to its financial performance
matters and appropriate follow up action.
whilst reviewing significant financial reporting issues and
judgements contained within those announcements. The
Audit Committee also reviews summary financial statements,
significant financial returns to regulators and any financial
information contained in certain other documents, such as
announcements of a price sensitive nature.
The Audit Committee reviews and challenges where
necessary:
External Audit
The Audit Committee:
(a) Considers and make recommendations to the Board,
to be put to shareholders for approval at the annual
general meeting, in relation to the appointment, re-
appointment and removal of the Company’s external
auditor. The Audit Committee oversees the selection
(a) The consistency of, and any changes to, accounting
process for new auditors and if an auditor resigns the
policies, both on a year on year basis and across the
Audit Committee shall investigate the issues leading to
Company and its Group;
this and decide whether any action is required;
(b) The methods used to account for significant or unusual
(b) Oversees the relationship with the external auditor
transactions where different approaches are possible;
including (but not limited to):
(c) Whether the Company has followed appropriate
(i) Approval of their remuneration, whether fees for
accounting standards and made appropriate estimates
and judgements, taking into account the views of the
audit or non audit services and that the level of fees
is appropriate to enable an adequate audit to be
external auditor;
conducted;
(d) The clarity of disclosure in the Company’s financial
reports and the context in which statements are made;
and
(e) All material information presented with the financial
statements, such as the operating and financial review
and the corporate governance statement (insofar as it
relates to the audit and risk management).
(ii) Approval of their terms of engagement, including
any engagement letter issued at the start of each
audit and the scope of the audit;
(iii) Assesses annually the auditor’s independence and
objectivity taking into account relevant national,
professional and regulatory requirements and the
relationship with the auditor as a whole, including
the provision of any non-audit services;
36
Griffin MininG LiMited (iv) Satisfies itself that there are no relationships (such
(i) Develops and implements a policy on the supply of
as family, employment, investment, financial or
non audit services by the external auditor, taking into
business) between the auditor and the Company
account any relevant ethical guidance on the matter.
In order to fulfil these duties, the Audit Committee receives
regular financial and other reports from management and
has unfettered access to employees of the Company and its
subsidiaries.
Adam Usdan
Chairman of the Audit Committee
13 May 2021
(other than in the ordinary course of business);
(v) Agrees with the Board a policy on the employment
of former employees of the Company’s auditor,
then monitoring the implementation of this policy;
(vi) Monitors the auditor’s compliance with relevant
ethical and professional guidance on the rotation
of audit partners, the level of fees paid by the
Company compared to the overall fee income
of the firm, office and partner and other related
requirements; and
(vii) Assesses annually the auditor’s qualifications,
expertise and resources and the effectiveness of
the audit process which shall include a report from
the external auditor on their own internal quality
procedures;
(c) Meets with the external auditor, including once at the
planning stage before the audit and once after the audit
at the reporting stage and at other times when necessary.
The Audit Committee is required to meet the external
auditor at least once a year, without management being
present, to discuss their remit and any issues arising
from the audit;
(d) reviews and approves the annual audit plan and
ensures that it is consistent with the scope of the audit
engagement;
(e) Reviews the findings of the audit with the external
auditor. This includes but is not limited to, the following:
(i) Discussion of any major issues which arose during
the audit,
(ii) Any accounting and audit judgements, and
(iii) Levels of errors identified during the audit.
(f) Reviews the effectiveness of the audit;
(g) Reviews the representation letter(s) requested by the
external auditor before they are signed by management;
(h) Reviews the management letter and management’s
response to the auditor’s findings and recommendations;
and
37
RepoRt and accounts 2020 report oF the remuneration Committee
To comply with Corporate Governance requirements
Nevertheless, the Remuneration Committee continues to
set by AIM in 2018, a remuneration committee (the
assess various remuneration policies to attract and retain
“Remuneration Committee”) was formed comprising the
future high-calibre executives and motivate them to develop
non executive directors Dal Brynelsen and Adam Usdan.
and implement the Group’s business strategy in order to
THE ROLE OF THE REMUNERATION
COMMITTEE
The Remuneration Committee
is
responsible
for
determining and agreeing with the Board the broad
policy for the remuneration and employment terms of the
Finance Director, Chairman and other senior executives
and, in consultation with the Chairman, for determining
the remuneration packages of such other members of the
optimise long-term shareholder value. It is intended that
such policy will build on past practice and apply in the
future.
The policy is being framed around the following key
principles:
• Total rewards will be set at levels that are sufficiently
competitive to enable the recruitment and retention of
high-calibre executives;
executive management of the Group, as it is designated
• Total incentive-based rewards will be earned through
to consider. The Committee is also responsible for the
the achievement of performance conditions consistent
review of, and making recommendations to, the Board in
with shareholder interests;
connection with share option plans and performance related
pay and their associated targets and for the oversight of
employee benefit structures across the Group.
All the executives engaged by the Griffin Group are
either employed by operating subsidiaries or independent
contractors
(contracting
through professional service
companies). Almost all of these executives or service
companies are employed or retained by Hebei Hua Ao. As
such, and as an operating mining company, Hebei Hua Ao
has always applied remuneration standards commensurate
with local and international mining industry standards and,
far more importantly, the legal and cultural traditions of the
People’s Republic of China.
The remuneration of non executive directors is a matter for
the Board. No director may be involved in any decision as
to their own remuneration.
This Remuneration Committee report includes a summary
of the remuneration policy and the Annual Report on
Remuneration.
Directors’ Remuneration Policy
With only one executive director in the Group, the
remuneration committee has determined that it would
be inflexible, bureaucratically cumbersome and therefore
•
The design of long-term incentives will be prudent and
will not expose shareholders to unreasonable financial
risk;
•
In considering the market positioning of reward
elements, account will be taken for the performance of
the Group and of each individual executive director; and
• Reward practice will conform to best practice standards
as far as reasonably practicable.
When formulating the scale and structure of remuneration,
the Remuneration Committee considers a number of
different factors including market practice and external
market data of the level of remuneration offered to directors
of similar type and seniority in other companies of the size
and activities of the Company.
In addition, the pay and employment conditions of
employees are also considered when determining directors’
remuneration. The Remuneration Committee may also
seek advice from external consultants where appropriate
and the services of FIT Remuneration Consultants have
been utilised in previous years. No director has been
involved in deciding the level and composition of their own
remuneration.
Long-term performance is incentivised by way of the grant
inappropriate to have an extensive and prescriptive formula
of share options.
for determining one employee’s
total compensation
package. Accordingly, the executive director’s remuneration
is considered by the Remuneration Committee, with the
assistance of outside executive compensation consultants,
on a year by year basis.
38
The Board seeks to strengthen the alignment of director,
employee and shareholder interests.
Griffin MininG LiMited Executive directors’ remuneration for 2020
Long Term Incentives
In November 2018, with the unanimous agreement of
all the issued option holders, the exercise periods were
extended for outstanding share purchase options over:
• 4,350,000 new ordinary shares (vested) exercisable at
£0.40 per new ordinary share;
• 10,732,500 new ordinary shares (vested) exercisable at
£0.30 pence per new ordinary share; and
• 6,666,667 new ordinary shares (since vested) exercisable
at £0.30 pence per new ordinary share
from 31 December 2018 in respect of the options exercisable
at 40 pence per share and from 31 December 2020 in respect
of the options exercisable at 30 pence per share, to the 31
December 2022. This was aimed at preventing the need, in
the short-term, for the majority of the option holders, once
exercising their options, to sell a significant portion of the
resulting issued shares to meet the associated subscription
costs and personal income tax liabilities imposed on such
exercise.
As detailed in the Directors’ Report on page 43 and 44,
the options exercisable into new ordinary shares of the
Company at an exercise of £0.40 per share were granted on
13 February 2014 and have all now vested.
The executive directors’ (Finance Director) base salary was
last increased with effect from 1 January 2014.
No bonuses were paid to the Finance Director in 2020
in view of the challenges facing the Company during the
Covid-19 pandemic. A bonus equivalent to two months
of the executive directors’ base salary was awarded to the
finance director in recognition of short term performance
in 2019.
In 2020, Roger Goodwin (Finance Director and Company
Secretary) received a basic salary of £315,000 (2019:
£315,000) and pension contributions of £30,000 (2019:
£30,000). In addition, he received directors’ fees of $201,000
(2019: $212,000) from subsidiary companies.
The service contract between the Company and Roger
Goodwin provides for three months notice by either side
or six months in the event of a change of control of the
Company.
Chairman
The Chairman has dedicated a significant portion of his
time to the Group and its operations. His services are
provided through a service entity, Keynes Capital, being the
registered business name of Keynes Investments Pty Ltd as
trustee for the Keynes Trust. In addition to the services of
the Chairman, Keynes Capital provides supporting services
to the Company in Australia, including support staff and
offices. The Chairman, Mladen Ninkov, is a director and
employee of Keynes Investments Pty Ltd.
Under a consultancy agreement with the Company, Keynes
Capital received fees of $2,801,000 (2019: $2,598,000), for
the provision of advisory and support services to Griffin
and its subsidiaries in 2020. An additional payment equal to
two months fees was made in 2019 in recognition of good
services provided.
The consultancy agreement with Keynes Capital runs from
1 July 2019 to 30 June 2021.
In addition to the above, the Chairman received directors’
fees from subsidiary companies of $201,000 in 2020 (2019:
$212,000).
39
RepoRt and accounts 2020 repOrt OF the remuneratiOn COmmittee (contInued)
The following directors and senior executives agreed to the extension of options in which they have an interest:
Name
Number of options
exercisable at 40 pence
per new ordinary share.
Number of options
exercisable at 30 pence
per new ordinary share.
Roger Goodwin Finance Director
Dal Brynelsen Director
Rupert Crowe Director
Adam Usdan Director
Mark Hine Chief Operating Officer
Vested
500,000
-
-
-
-
Vested
1,500,000
900,000
900,000
1,166,166
250,000
Non Executive Directors
The non-executive Directors’ fees were last reviewed with
effect from 1 July 2019 fees and were held at £66,125 per
annum.
In addition to the above Mr Dal Brynelsen received directors
fees of $177,000 (2019: $188,000) for acting as a director of
Hebei Hua Ao. Since the year end Mr Dal Brynelsen has
agreed to forego the fees from the Company in view of the
directors fees he receives from Hebei Hua Ao.
In addition to the above Mr Rupert Crowe received fees
of $30,000 (2019: $50,000) for geological services over and
above that expected from him as part of his services as a non
executive director.
Total Directors’ Remuneration
The table below sets out the total remuneration payable to the Directors:
Fees Salary
2020
Pension Total
Mladen Ninkov*
Dal Brynelsen
Rupert Crowe
Roger Goodwin
Adam Usdan
$000
201
262
114
201
84
Contributions
$000
$000
-
-
-
402
-
-
-
-
38
-
$000
201
262
114
641
84
2019
Fees Salary Salary
basic
$000
Pension
bonus Contributions
$000
$000
$000
212
271
134
212
84
-
-
-
399
-
-
-
-
66
-
66
Total
$000
212
271
134
715
84
-
-
-
38
-
Total
862
402
38
1,302
913
399
38
1,416
*Keynes Capital, the registered business name of Keynes Investments Pty Ltd as trustee for the Keynes Trust, received fees under
a consultancy agreement of $2,801,000 (2019: $2,598,000) 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 Ltd.
No share options were granted to the directors in 2020 or 2019. No options were exercised by the directors in 2020 or 2019.
Dal Brynelsen
Chairman of the Remuneration Committee
13 May 2021
40
Griffin MininG LiMited
direCtors
Mladen Ninkov, Chairman, Australian, holds a Master
Dal Brynelsen, Director, Canadian, is a graduate of the
of Law Degree from Trinity Hall, Cambridge and Bachelor
University of British Columbia in Urban Land Economics.
of Laws (with Honours) and Bachelor of Jurisprudence
Mr. Brynelsen has been involved in the resource industry
Degree from the University of Western Australia. He is the
for over 40 years. He has been responsible for the discovery,
principal of Keynes Capital. He has a mining, legal, fund
development and operation of several underground gold
management and investment banking background and is
mines during his career.
admitted as a barrister and solicitor of the Supreme Court
of Western Australia. He was the Chairman and Managing
Director of the Dragon Capital Funds management group,
a director and Head of International Corporate Finance at
ANZ Grindlays Bank Plc in London and a Vice President
of Prudential-Bache Securities Inc. in New York. He also
worked at Skadden Arps Slate Meagher & Flom in New
York and Freehill Hollingdale & Page in Australia. He has
been chairman and director of a number of both public and
private mining and oil and gas companies.
Adam Usdan, Director, USA, holds an MBA from the
Kellogg Graduate School of Management at Northwestern
University with majors
in Finance, Marketing, and
Accounting, and a BA in English from Wesleyan University.
He is the President of Trellus Management Company LLC,
an equity hedge fund based in the USA. Mr Usdan founded
Trellus Management in January 1994 and has been in the
investment advisory industry for over 30 years. Mr Usdan
began his investment career in 1987 at Odyssey Partners
where he was responsible for managing long/short U.S.
Roger Goodwin, Finance Director, British, is a Fellow
equity (small to mid-cap) pools of capital.
of the Institute of Chartered Accountants in England and
Wales. He has been with the Company since 1996 having
previously held senior positions in a number of public and
private companies within the natural resources sector. He
has a strong professional background, including that as a
manager with KPMG, with considerable public company
and corporate finance experience and experience of emerging
markets.
41
RepoRt and accounts 2020
senior exeCutives
Dr Bo Zhou, General Manager China, Australian, holds
Shirley Tsang, Director, China Zinc Limited, British,
a PhD in exploration geology from Sydney University and a
is a Chartered Management Accountant (United Kingdom)
BSc in economic geology from Peking University. He was
and a CPA (Hong Kong & Australia). She holds an MBA
Managing Director of Sinovus Mining Ltd, an ASX listed
(Finance) from the City University Business School, United
company with mineral interests in China. Prior to that he
Kingdom. She started her career as an auditor with Ernst
was the General Manager for Guangxi Golden Tiger Mining
& Whinney and moved on to business advisory practice for
JV, a Sino-Australian JV gold company focussed on Guangxi,
international clients with Arthur Young. She was head of the
China, controlled by Golden Tiger Mining NL, an ASX
China and Hong Kong business advisor practice from 2003
listed company. He has also worked as the Senior Geologist
to 2017 in the Tricor Group. She has considerable experience
for Silk Road Resources (a TSX listed company), responsible
in corporate restructuring for international clients and best
for evaluating various gold properties in Gansu Province in
practice in corporate governance. She is currently Managing
central western China. Dr Zhou has considerable experience
Director of SEAJA Consultancy Limited in Hong Kong.
in the Chinese resources sector.
Glenn Sheldon, China Zinc Business Development
Damian Houseman, General Manager Caijiaying Mine,
Manager, Australian, is a geologist holding a BSc from
Australian, holds a diploma in mining from the School of
Adelaide University. He is a Fellow of the AusIMM and AIG,
Science and Engineering, Ballarat University, Victoria,
Member of SocEcGeol. He is fluent in Mandarin Chinese
Australia (now Federal University of Australia). He has over
with special emphasis on geological and mineral industry
23 years’ experience in the underground mining industry
terms. Prior to joining Griffin he was Principal Geologist
from underground operator to senior management roles. He
for Mining Associates, providing competent person services
was previously underground mine manager at Centamin’s
to inter alia the Hong Kong Stock Exchange; Vice President
Sukari Gold Mine in Egypt; with Ausino Drilling Services Pty
Exploration for RH Mining Resources Ltd in Hong Kong;
Ltd in China; RH Mining Limited in China; Bariq Mining
Business Development Manager Exploration East Asia for
Ltd in Saudi Arabia; Downer Mining Limited in Papua New
Sandvik Mining and Construction; JV General Manager
Guinea; Eldorado in China and Xstrata in Australia.
Dragon Mountain Gold in China; Exploration Manager,
Wendy Zhang, Chief Financial Officer, Hebei Hua Ao,
Australian, holds a Master of Accounting degree from
Macquarie University, is a member of the Certified Practising
Accountants of Australia and is a qualified member of the
Chinese Institute of Certified Public Accountants for 11
years. She spent 4 years as Financial Controller for Golden
Lotus Resources plc in Mongolia; Chief Representative for
Centerra Gold Inc in China; President and Exploration
Manager for TVI Pacific’s China WOFE - Hunan Pacific
Geological Exploration Inc; Site Manager Jinfeng for Sino
Gold Limited and Exploration and Business Development
Manager for Newmont China Limited.
Tiger Mining’s joint venture operations in China. Previously
John Steel, Mine Manager, Australian, is a graduate
she was Chief Accountant for Shanghai Silk Group and
Mining Engineer from the Ballarat School of Mines and holds
subsequently Ann Taylor Shanghai.
a Master of Business Administration from Deakin University.
He is a member of the Australian Institute of Mining and
Metallurgy. John has extensive global mining experience
including over a decade of in site operational expertise with
tier one companies in Australia, Canada (Xstrata Mining
PLC) and the Middle East (Brarrick Gold Corporation).
John also has extensive supplier side experience holding
country Managing Director positions in Norway (EPC
Groupe) as well as General Manger positions with several
explosive and technology service providers within Australia.
42
Griffin MininG LiMited 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 31 December 2020.
FinanCial results
The Group profit before taxation for 2020 amounted to US$14,515,000 (2019: US$11,712,000). Taxation of US$5,605,000
(2019: US$5,628,000) has been provided. No dividends were paid in 2020 (2019: nil). US$8,910,000 has been credited to reserves
(2019: credited US$6,084,000).
The basic earnings per share amounted to 5.16 cents (2019: 3.52 cents). The attributable net asset value per share at 31 December
2020 amounted to 135 cents (2019: 124 cents).
Whilst the directors do not recommend the payment of a dividend at this time, in February 2021 the Company implemented
a share buy back programme of up to a value of $10 million to acquire up to five million ordinary shares over the next 3 years
to return excess monies not required to meet financial commitments and working capital requirements to shareholders, subject
to cash balances being available to undertake those purchases. Griffin believes the buybacks will be value accretive and value-
enhancing for the shareholders. The Company cannot guarantee that it will be successful in executing this program over the
period stated. This arrangement is in accordance with the Company’s general authority to repurchase shares.
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 31
December 2020 and the indication of likely future developments are set out on page 6 to 33.
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 – Deceased 10 February 2021
Adam Usdan – American (USA)
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 31 December 2020 and their immediate families in the share capital of
the Company were as follows:
Name
At 31 December 2020
At 1 January 2020
Ordinary
shares,
number
Options over ordinary
shares, number
exercisable at
30 pence
40 pence
Mladen Ninkov
Dal Brynelsen
Rupert Crowe
33,001
397,001
1
-
900,000
900,000
-
-
-
Ordinary
shares,
number
33,001
397,001
1
Options over ordinary
shares, number
exercisable at
30 pence
40 pence
-
900,000
900,000
-
-
-
Roger Goodwin
877,830
1,500,000
500,000
877,830
1,500,000
500,000
Adam Usdan
33,242,890
1,166,667
-
33,242,890
1,166,667
-
All of the Directors’ interests detailed are beneficial.
43
RepoRt and accounts 2020
direCtOrs repOrt (contInued)
On 13 February 2014 options (the “40 pence 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 40 pence option entitles the holder to subscribe for new ordinary shares in the Company at an exercise price of £0.40 per
share on or before 31 December 2018, subsequently extended to 31 December 2022. One third of these options vested on 31
December 2014, one third vested on 31 December 2015, and one third vested on 31 December 2016.
On 6 February 2015 the Board resolved to adopt a new share option scheme (the “30 pence options”) over a total of 20,000,000
new ordinary shares in the Company in order to retain and incentivise the Company’s directors and management.
Each 30 pence option entitles the holder to subscribe for new ordinary shares in the Company at an exercise price of 30 pence
per new ordinary share on or before 31 December 2020 subsequently extended to 31 December 2022. One third of these options
vested immediately upon being granted, one third of these options vested on 31 December 2016, and a further third of each
holder’s options vested on the granting of a new mining licence over Zone II at the Caijiaying Zinc Gold Mine.
SUBSTANTIAL INTERESTS
Apart from Adam Usdan’s interests in the share capital of the Company, the Company has been notified that:
On 25 January 2021 Andrew Goffe and controlling undertakings held an interest in 26,513,657 ordinary shares in the Company
representing 15.227% of the Company’s then issued share capital; and
On 1 March 2021 Richard Griffiths and controlling undertakings held an interest in 24,313,224 ordinary shares in the Company
representing 13.93% of the Company’s then issued share capital, together with voting rights through third party financial
instruments equating to 3.34% of the Company’s then issued share capital.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties facing the Group are set out below, together with details of how these are currently
mitigated. Further information on how the Group manages risk is given on pages 76 to 79.
Risk
Comment
Business
Impact
Mitigation
Economic Risks
Exposure to a fall in
zinc, gold, silver and
lead metal prices.
Revenue is dependent upon metal
prices.
High
common with other mining
In
companies operating
in China the
Group sells its products by auction to
local smelters and agents, however,
the
Griffin continues
appropriateness
and
indicative cost of put options.
review
of hedging
to
Exposure to fluctuations
in the Renminbi / US
dollar exchange rate.
A fall in the value of the Renminbi
would reduce the US dollar value of
revenues, whilst an increase in the
value of Renminbi would increase
operating cost.
Moderate
The Renminbi
loosely pegged
is
to the US dollar. Griffin monitors
foreign exchange rates and reviews the
appropriateness of hedging receivables.
44
Griffin MininG LiMited prinCipal risks and unCertainties Continued
Risk
Comment
Business
Impact
Mitigation
Economic Risks (continued)
Exposure to increases
in the market prices of
materials,
equipment
and services the Group
uses.
Country Risks
to
is
The Group
increases in the market prices for
materials, services and equipment.
subject
Moderate
The Group seeks to agree long term
contracts for all major services and
goods supplied.
Exposure to political
and social risks in the
Peoples Republic of
China (“the PRC”).
Griffin’s assets are located in the PRC
and therefore exposed to any adverse
changes in the political and social
situations there.
Exposure to changes in
the fiscal and regulatory
regime.
In addition to political/social risks,
the Group is exposed to changes in
permitting, environmental, health and
safety, and tax regulations in the PRC
which may result in a more challenging,
or costly, operating environment.
Low
High
The Group has operated in the PRC for
over 20 years in which time the country
has been relatively stable.
Griffin actively engages with the local
PRC authorities and agencies to identify
and minimise the impact of changes in
PRC regulations.
Operational Risks
Reliance on Third
Party Contractors
Moderate
for
particularly
Griffin uses a number of unrelated
its
contractors,
mining, haulage and drilling activities.
Each of these activities has inherent
risk, including injury or death to the
contractor’s employees. Such events
could cause a total shutdown of all
operational activities which may take a
substantial time to recommence.
Exposure
hazards
to mining
The Group is exposed to a number of
risks and hazards typically associated
with mining for example rock falls,
flooding and mechanical breakdowns.
Moderate
Reliability of Mineral
Resources
and Ore
Reserves
The calculation of Mineral Resources
and Ore Reserves involves significant
assumptions and estimates that may
prove inaccurate.
Low
Griffin has an extensive occupational
in
Health and Safety Department
conjunction with a Mining Manager
and his team of underground foremen
who constantly oversee all contractors’
activities, inter alia, punishing and
fining contractors for safety breaches.
Griffin keeps under consideration
moving to owner operated activities.
Griffin’s operational teams continually
monitor mining and other risks, and
report to senior management who
report to the Board of directors, taking
immediate and appropriate measures
to minimise any such risks and hazards
identified. In addition, the Group’s
operations are regularly monitored by
the PRC Safety Bureaus.
Griffin’s Mineral Resources and Ore
Reserve estimates are prepared by third
party consultants, based in Australia, who
are deemed “experts” under the JORC
Code.
45
RepoRt and accounts 2020
direCtOrs’ repOrt (contInued)
prinCipal risks and unCertainties Continued
Risk
Comment
Business
Impact
Mitigation
Operational Risks (continued)
Mine fatality
High
A fatality in the mine would result in
the closure of the mine and suspension
of operations for an indefinite time to
allow a full investigation by the PRC
authorities with subsequent penalties
possibly including fines, dismissal of
personnel held responsible and loss of
licences.
Other Risks
Exposure
operation
to a single
Licence administration
Griffin
single
is reliant upon a
operation, being the Caijiaying zinc
gold mine in the PRC. Factors affecting
operations at Caijiaying have an impact
upon the Group.
Moderate
High
its
through
Griffin,
subsidiary
companies, holds a number of mining,
licenses and
exploration and other
permits to operate. These normally
include
ongoing
operation and require periodic renewal.
Renewals are not guaranteed.
conditions
for
immediate
As noted above, Griffin’s operational
teams
continually monitor mining
and other risks and report to senior
management who report to the Board,
appropriate
taking
measures to minimise any identified risks
and hazards. In addition, the Group’s
operations are monitored and continually
inspected by the PRC local, County, City
and Provincial Safety Bureaus.
and
It is the Company’s policy to pursue
through
opportunities
growth
expansion in the Caijiaying area, as well
as reviewing acquisition opportunities
which can be shown to be value
accretive.
All licensing requirements are kept
under review with operational staff
liaising with local PRC authorities to
ensure conditions are adhered to and
applications made timely and in good
order.
Key management
The management of Caijiaying is reliant
on a small number of key executives,
both inside and outside of China. Their
death, retirement or departure may have
significant effect on the operations of
the Company.
Moderate
Griffin has contractual arrangements
with all key employees which are
renewed on a regular basis.
Geological and Historical
Information
The loss of historical and/or geological
information would have
a very
significant impact on the operations of
the Company.
Low
Griffin has instituted a complete back
up system relating to all geological and
operational data in Perth with CSA
Global. It is updated on a daily basis.
46
Griffin MininG LiMited Risk
Comment
Business
Impact
Mitigation
Other Risks (continued)
Bribery and Corruption Whilst strict
internal policies and
procedures to ensure compliance with
applicable laws are applied to prohibit
all forms of bribery and corruption
the risk remains that employees or
contractors have circumvented these
policies and procedures which could
result in prosecution of the Group and
its officers.
Moderate
Pandemic
(Covid-19 / SARS)
A further outbreak of Covid-19 or
other virus may lead to restrictions on
operations being imposed by the PRC
authorities including a suspension in
operations.
Moderate
The Group prohibits bribery and
corruption in any form by directors,
employees or by those working for and/
or connected with the business. With
the advice and support of the Group’s
lawyers the Group has implemented
anti bribery and corruption policies
and procedures including: anti-bribery
instruction to staff and third party
contractors; on-going monitoring,
including setting up reporting channels;
and regular review of antibribery
reporting policies and procedures.
China imposed strict controls to control
the Covid-19 and SARS outbreaks
emerging from these relatively quickly.
Griffin works closely with the PRC
authorities to minimise the impact of
such outbreaks upon personnel and
operations.
POST BALANCE SHEET EVENTS
There were no significant post balance sheet events requiring adjustment to the financial statements or disclosure. Since 31
December 2020 the Company has bought in 316,840 ordinary shares to be held in Treasury at a cost of $584,000.
GOING CONCERN
Whilst it is difficult to accurately predict future profitability and liquidity, particularly regarding the impact of metal prices, the
directors consider that at current metal prices and with the benefit of agreed banking facilities the Group can continue as a going
concern for the foreseeable future without the need to curtail operations. This is further considered in the notes to the financial
statements on page 60 to 61.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP were re-appointed auditors at the Annual General Meeting of the Company held on 17 December
2020 and 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
47
RepoRt and accounts 2020 direCtOrs’ repOrt (contInued)
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE GROUP
FINANCIAL STATEMENTS
The directors are responsible for preparing the Group financial statements in accordance with applicable law and regulation.
The Bermuda Companies Act 1981 requires the directors to prepare Group financial statements for each financial year. Under
that law the directors have prepared the Group financial statements in accordance with International Financial Reporting
Standards (“IFRSs”) as adopted by the European Union. The directors must not approve the Group financial statements unless
they are satisfied that the Group financial statements 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 the Group financial statements, the directors are responsible for:
•
selecting suitable accounting policies and then applying them consistently;
•
stating whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures
disclosed and explained in the Group financial statements;
• making judgements and accounting estimates that are reasonable and prudent; and
• preparing the Group financial statements on the going concern basis unless it is inappropriate to presume that the group will
continue in business.
The directors 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 keeping adequate accounting records that are
sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of
the Group, and enable them to ensure the Group financial statements comply with applicable law and regulation.
DIRECTORS’ CONFIRMATIONS
In the case of each director in office at the date the Directors’ Report is approved:
•
so far as the director is aware, there is no relevant audit information of which the Group’s auditors are unaware; and
•
they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant
audit information and to establish that the Group’s auditors are aware of that information
This report was approved by the Board and signed on its behalf by:
Roger Goodwin
Finance Director and Company Secretary
13 May 2021
48
Griffin MininG LiMited
independent auditors’ report to the members oF
griFFin mining limited
report on the audit oF the group FinanCial statements
opinion
In our opinion, Griffin Mining Limited’s Group Financial Statements (the “financial statements”):
• give a true and fair view of the state of the Group’s affairs as at 31 December 2020 and of its profit and cash flows for the year
then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union; and
• have been prepared in accordance with the requirements of the Companies Act 1981 (Bermuda).
We have audited the financial statements, included within the Report and Accounts 2020 (the “Annual Report”), which comprise:
the Consolidated Statement of Financial Position as at 31 December 2020; the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Cash Flow Statement and the Consolidated Statement of Changes in
Equity for the year then ended; and the Notes to the financial statements which include a description of the significant accounting
policies.
Our opinion is consistent with our reporting to the Audit Committee.
basis For opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
our audit approaCh
Overview
Materiality
Audit Scope
• Overall Group materiality: $1 million (2019: $1.7m), based on 5% of the 3-year average
profit before tax
• We conducted full scope audits of three components out of the Group’s ten entities
which were selected due to their size and risk characteristics.
• This enabled us to obtain 100% coverage of consolidated revenue, 99% coverage of
consolidated profit before tax and 98% coverage of total assets for the Group.
• To ensure sufficient oversight, direction and responsibility of the audit work performed
by the component audit team in China, the Group team performed a number of
procedures throughout the audit which included directing the audit approach and
procedures, conducting remote file reviews and conducting remote face to face meetings
with local management and the component team.
Key Audit Matters
• Extension of the business licence.
•
Impact of COVID-19.
49
RepoRt and accounts 2020 independent auditors’ report to the members oF
griFFin mining limited
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was
evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to unethical and prohibited business practices and compliance with the regulations of the Ministry of Land
and Natural Resources of the PRC, and we considered the extent to which non-compliance might have a material effect on the
financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as
the Companies Act 1981 (Bermuda). We evaluated management’s incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls), and determined that the principal risks were related to posting
inappropriate journal entries to manipulate results, and management bias in key accounting estimates. The Group engagement
team shared this risk assessment with the component audit team so that they could include the appropriate audit procedures in
response to such risks in their work. Audit procedures performed by the Group engagement team and/ or the component audit
team included:
• Enquiries of the directors, management and the Group’s legal counsel, including consideration of known or suspected
instances of non-compliance with laws and regulations and fraud;
•
Inspection of supporting documentation, where appropriate;
• Evaluation of management’s controls designed to prevent and detect irregularities;
• Review of minutes of meetings of the Board of Directors;
• Challenging assumptions and judgements made by management in relation to their significant accounting judgements and
estimates;
•
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations; and
• Review of related work performed by the component audit team, including their responses to risks related to management
override of controls and to the risk of fraud in revenue recognition.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations or through collusion.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified
by our audit.
50
Griffin MininG LiMited independent auditors’ report to the members oF
griFFin mining limited
Approval of the increase in production permit, Impairment of property, plant and equipment, and Basis of going concern, which
were key audit matters last year, are no longer included because in December 2020, a new mining licence covering both Zone
II and III was granted, that allows production to increase up to 1.5 million tonnes per annum; there have been no impairment
trigger events at 31 December 2020 that could imply a risk of impairment in long term assets; and management’s going concern
assessment, at the date of signing, did not require the increased audit effort necessary in 2019. Otherwise, the key audit matters
below are consistent with last year.
key audit matter
Extension of the business licence
how our audit addressed the key audit
matter
Refer to Note 1, the Significant judgements and estimates
section and to Note 11, Property, Plant and Equipment.
The current life of mine plan, which includes extraction
of resources from ZONE III only, extends beyond 2037 to
2056. Under the terms of the Group’s current joint venture
agreement with Zhangjiakou Caijiaying Lead Zinc Mining, the
Group’s business licence will expire in 2037.
Management is currently working to convert their joint
venture agreement to a limited liability company. As a result of
this conversion management expects to be able to extend the
term of the business licence as a matter of routine and at no
additional cost.
Judgement is needed as to whether this conversion to a limited
liability company would enable an extension of the term of the
business licence as a matter of routine, and if it would lead to
additional cost being incurred. This impacts asset carrying
amounts and depreciation rates because a shorter business licence
would reduce the amount of resources that could be extracted.
We consider this to be a key audit matter due to the level of
judgement being exercised and the impact of this judgement on
In addition to holding discussions with management, we
have discussed with, and obtained correspondence from,
management’s external legal advisors to understand the
process for extending the term of the business licence and
confirmed their view that extending the term of the business
licence will be routine in nature and that no additional
costs will be incurred, once the joint venture agreement is
converted to a limited liability company.
We also requested management to sensitise their life of
mine plan to show the impact of the business licence not
being granted and note that due to the significant headroom,
modelling this impact shows no impairment.
Based on these enquiries and procedures, we are satisfied
with management’s judgement that converting the current
joint venture agreement to a limited liability company will
enable an extension of the term of the business licence as a
matter of routine and at no additional cost.
Finally, we considered the adequacy of management’s
disclosure of the key judgements in relation to the extension
of the business licence and consider them to be reasonable.
asset carrying values.
Impact of COVID-19
Refer to the ‘Caijiaying’ and the ‘Sustainability, Environment
Our procedures and conclusions in respect of going concern
and Local Community’ sections of the Annual Report and
are included in the “Conclusions relating to going concern”
to Note 1, the Going Concern section, in the Notes to the
section below.
financial statements.
Covid-19 was declared a pandemic by the World Health
Organisation on 11 March 2020 and the ongoing response is
having an unprecedented impact on the global economy.
Management have set out in the Annual Report the impact
that Covid-19 has had on the Group and Company, and the
actions that they have taken and continue to take, to address the
pandemic and its effect on the operations.
We considered the appropriateness of disclosures in the
Annual Report with regards to the impact and risks related to
the pandemic and consider these to be appropriate.
51
RepoRt and accounts 2020
independent auditors’ report to the members oF
griFFin mining limited
key audit matter
how our audit addressed the key
audit matter
In the first quarter of 2020, operations at the Caijiaying Mine
were suspended for a month to comply with restrictions
instigated by the PRC authorities to contain the coronavirus
pandemic. However, once operations recommenced, mining
and processing operations soon returned to expected levels
with minimal further impact.
Management has also considered the potential impact of
Covid-19 in undertaking their assessment of going concern.
Based on this analysis management concluded that there is no
material uncertainty in respect of the Group’s going concern
assessment
We determined management’s consideration of the impact of
Covid-19 to be a key audit matter.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry
in which it operates.
Griffin Mining Limited is a Bermuda company listed on AIM. The Group’s principal operation is the Caijiaying zinc mine in
China. In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed by
us, as the Group audit team, or by the component auditors in China.
Our Group audit scope focused primarily on the Caijiaying zinc mine in China, which was subject to a full-scope audit by the
component auditors. A full scope audit was also performed over the parent company and a service entity by the Group team. The
above gave us coverage of 100% of consolidated revenue, 99% coverage of consolidated profit before tax and 98% coverage of
total assets for the Group.
As Covid-19 prevented travel to China, we were unable to make a site visit as planned; we instead conducted our oversight of
the component audit team through regular dialogue via conference calls, video conferencing and other forms of communication
as considered necessary as well as remote working paper reviews to satisfy ourselves as to the appropriateness of audit work
performed by the component audit team. We also attended key meetings virtually with local management and the component
audit team. We reviewed the audit work of the component audit team, which included file reviews, participation in key audit
discussions with local management and participation in the audit clearance meeting.
The Group engagement team directly performed the audit of the consolidation. This, together with additional procedures
performed at the Group level, gave us the evidence we needed for our opinion on the Group financial statements as a whole.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate on the financial statements as a whole.
52
Griffin MininG LiMited independent auditors’ report to the members oF
griFFin mining limited
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
$1 million (2019: $1.7million).
How we determined it
5% of the 3 year average profit before tax.
Rationale for benchmark applied
Profit is the key indicator of the Group’s performance and the most appropriate
benchmark for materiality. Due to volatility in commodity prices which has impacted
profitability, we have used a 3-year average profit before tax as the benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across components was between $12,000 and $675,000
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $50,000
(2019: $85,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
ConClusions relating to going ConCern
Our evaluation of the directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting
included:
• Obtaining and reviewing the Group’s cash flow forecasts for the going concern period, challenging management’s assumptions
used and verifying that these were consistent with our existing knowledge and understanding of the business, as well as with
the Board-approved budget;
• Reviewing the Group’s cash flow forecasts under the severe but plausible downside scenario, evaluating the assumptions used,
and verifying that the Group is able to maintain liquidity within the going concern period under these scenarios;
• Testing the model for mathematical accuracy; and
• Assessing the adequacy of the disclosure provided in Note 1 of the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s ability
to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
reporting on other inFormation
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
53
RepoRt and accounts 2020 independent auditors’ report to the members oF
griFFin mining limited
reporting on other inFormation (contInued)
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on
these responsibilities.
responsibilities For the FinanCial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities in respect of the Financial Statements, the directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied
that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Partner responsible for the audit
The engagement partner on the audit resulting in this independent auditors’ report is Timothy McAllister.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Section 90 of the Companies Act 1981 (Bermuda) and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
13 May 2021
54
Griffin MininG LiMited Consolidated inCome statement
For the year ended 31 December 2020
(expressed in thousands US dollars)
Revenue
Cost of sales
Gross profit
Administration expenses
Operating Profit
Losses on disposal of plant and equipment
Provisions against intangible assets
Foreign exchange gains / losses
Finance income
Finance costs
Other income
Profit before tax
Income tax expense
Profit for the year
Basic earnings per share (cents)
Diluted earnings per share (cents)
Notes
2020
$000
2019
$000
2
2
75,403
82,267
(42,737)
(48,609)
32,666
2
(17,518)
33,658
(19,433)
3
5
12
6
7
8
15,148
(1,129)
(10)
22
108
(359)
735
14,515
9
(5,605)
8,910
5.16
4.88
10
10
14,225
(305)
(1,985)
(93)
171
(377)
76
11,712
(5,628)
6,084
3.52
3.24
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
55
RepoRt and accounts 2020
Consolidated statement oF Comprehensive inCome
For the year ended 31 December 2020
(expressed in thousands US dollars)
Profit for the year
2020
$000
8,910
2019
$000
6,084
Other comprehensive income / (expenses) that will be reclassified to profit or loss
Exchange differences on translating foreign operations
9,662
(2,324)
Other comprehensive income / (expenses) for the year, net of tax
9,662
(2,324)
Total comprehensive income for the year
18,572
3,760
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
56
Griffin MininG LiMited
Consolidated statement oF FinanCial position
As at 31 December 2020
(expressed in thousands US dollars)
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets – exploration interests
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
Shares held in treasury
Chinese statutory re-investment reserve
Other reserve on acquisition of non controlling interests
Foreign exchange reserve
Profit and loss reserve
Total equity attributable to equity holders of the parent
Non-current liabilities
Other Payables
Long-term provisions
Deferred taxation
Finance leases
Current liabilities
Trade and other payables
Finance leases
Total current liabilities
Notes
2020
$000
2019
$000
11
12
13
14
15
16
19
20
21
22
23
22
266,709
228,287
325
322
267,034
228,609
5,333
6,675
16,435
28,443
3,839
1,861
19,885
25,585
295,477
254,194
1,728
68,470
3,690
2,072
(917)
2,830
(29,346)
11,365
173,814
233,706
13,487
2,200
3,359
-
19,046
42,342
383
42,725
1,728
68,455
3,690
2,072
(917)
2,500
(29,346)
1,703
165,059
214,944
-
2,150
2,731
479
5,360
31,769
2,121
33,890
Total equities and liabilities
295,477
254,194
Attributable net asset value per share to equity holders of parent
24
$1.35
$1.24
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The financial statements on pages 55 to 81 were approved by the Board of Directors and signed on its behalf by:
Mladen Ninkov
Chairman
13 May 2021
Roger Goodwin
Finance Director
57
RepoRt and accounts 2020
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T
Griffin MininG LiMited
Consolidated Cash Flow statement
For the year ended 31 December 2020
(expressed in thousands US dollars)
Net cash flows from operating activities
Profit before taxation
Foreign exchange (gains) / losses
Finance income
Finance costs
Depreciation, depletion and amortisation
Provision against intangible assets
Losses on disposal of equipment
(Increase) / decrease in inventories
(Increase) / decrease in receivables and other current assets
Increase in trade and other payables
Taxation paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
(Costs) / proceeds on disposal of equipment
Payments to acquire – mineral interests
Payments to acquire – plant and equipment
Payments to acquire office furniture & equipment
Payments to acquire – intangible fixed assets – exploration interests
Net cash outflow from investing activities
Cash flows from financing activities
Issue of ordinary shares on exercise of options
Interest paid
Finance lease advance
Finance lease repayments
Net cash outflow from financing activities
(Decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of foreign exchange rates
Cash and cash equivalents at the end of the year
Cash and cash equivalents comprise bank deposits
Bank deposits
Notes
6
7
11
12
6
11
11
12
2020
$000
14,515
(22)
(108)
359
12,801
10
1,129
(1,494)
(4,814)
5,666
(3,644)
24,398
108
(44)
(18,691)
(5,684)
(5)
(11)
(24,327)
15
(112)
-
(2,469)
(2,566)
2019
$000
11,712
93
(171)
377
12,343
1,985
305
1,112
959
4,016
(11,092)
21,639
171
1
(18,883)
(8,193)
(69)
(308)
(27,281)
14
(52)
65
(2,762)
(2,735)
(2,495)
(8,377)
19,885
(955)
16,435
28,452
(190)
19,885
16,435
19,885
Included within net cash flows of $2,495,000 (2019: $8,377,000) are foreign exchange gains of $22,000 (2019: losses $93,000)
which have been treated as realised.
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
59
RepoRt and accounts 2020
notes to the FinanCial statements
1. basis oF aCCounting
The financial statements have been prepared in accordance with applicable International Financial Reporting Standards as
adopted by the EU and in accordance with the Bermuda Companies Act. The significant accounting policies adopted are detailed
below: These policies have been consistently applied to all years unless otherwise stated.
aCCounting Convention
The financial statements have been prepared under the historical cost convention.
new and amended standards adopted by the group
The Group has applied the following standards and amendments for the first time for their annual reporting period commencing
1 January 2020:
• Definition of Material - amendments to IAS 1 anc IAS 8
• Definition of a Business - amendments to IFRS 3
•
Interest Rate Benchmark Reform - amendments to IFRS 9, IAS 39 and IFRS 7
• Revised Conceptual Framework for Financial Reporting
• Proceeds before Intended Use - Amendments to IAS 16
The amendments listed above did not have any impact on the amounts recognised in the current period and are not expected to
significantly affect future periods.
new standards and interpretations not yet adopted
At the date of authorisation of these financial statements, certain new and amended accounting standards and interpretations
have been published that are not mandatory for the period ending 31 December 2020, nor have they been early adopted by the
Group. These standards and interpretations are not expected to have a material impact on the Company’s consolidated financial
statements in the current or future reporting periods.
going ConCern
The financial statements have been prepared on a going concern basis. The Group regularly prepares cash flow forecasts and revises its
budgets to adapt to changing situations as the need arises. These have been extended for more than a year and adapted for a number
of plausible scenarios to confirm that in all cases the Group could maintain liquidity cover. Amongst other matters management has
taken into account sensitivities for the possible impacts of additional restrictions to contain further outbreaks of Covid-19. Whilst
China has experienced localised outbreaks of Covid-19 in the latter part of 2020 and into 2021, strict travel restrictions, testing
and quarantine requirements implemented by the PRC authorities and Griffin have limited the impact and spread of Covid-19,
such that no cases of Covid-19 have been reported at Caijiaying nor in the surrounding county. As a result, there have been no
interruptions to operations at Caijiaying since the initial outbreak of Covid-19 in the first quarter of 2020. In the unlikely event
of an outbreak of Covid-19 at Caijiaying, every endeavour would be made to continue operations at Caijiaying, but supplies to
and collection of concentrate from Caijiaying could be interrupted whilst the Caijiaying site could be quarantined. With this in
mind a one month suspension has been built into the cash flow forecasts on a severe case scenario incorporating:
• A reduction in market prices to $2,150 per tonne of zinc in July, rising incrementally month by month to $2,790 by the end
of 2020. Management considers this a reasonable downside; and
• Mitigating actions within management’s control, including the deferral of payments to certain creditors for a short period.
• Management has held foreign exchange rates flat as they note that because the zinc price is pegged to the US Dollar and the
Group incurs costs in Renminbi there is a natural currency hedge.
Management have also considered a two month suspension in operations at the beginning of 2022, without any fall in metal prices, to
coincide with the Winter Olympics at Chongli.
60
Griffin MininG LiMited notes to the FinanCial statements
going ConCern (Continued)
On the aforementioned bases and with the existing bank facilities available to the Group, the board of directors consider the Group will
be able to meet its liabilities as they fall due and have prepared the financial statements on a going concern basis.
Consolidation basis
The Group financial statements consolidate the financial statements of the Company and all its subsidiary undertakings drawn
up to 31 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 their activities. The Group obtains and exercises control through voting rights.
Management has assessed its involvement in Hebei Hua Ao and Hebei Sino Anglo in accordance with IFRS 10 and concluded
that it has control.
In making its judgement, management considered the Group’s voting rights, the relative size and dispersion of the voting rights
held by other shareholders and the extent of recent participation by those shareholders in general meetings.
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.
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 recognised on
a delivery / collection basis as at this point the performance obligations are satisfied. Delivery / collection occur following open
auction of metals in concentrate and where delivery is taken and cash received within 30 days of the agreement.
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 resources
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. Until such time intangible assets are not depreciated.
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 11).
Residual values
Material residual value estimates are updated as required, but at least annually whether or not the asset is re-valued.
depreCiation
Depreciation rates reflect the term of operations, extractable resource, and economic lives of the assets as follows:
• Mine acquisition, development, licence, pre production and land use rights - on a unit of production basis.
• Plant and buildings - over 25 years on a straight line basis with a 10% residual value.
• Dry tailings facility held under finance lease- over 15 years on a straight line basis with no residual value.
61
RepoRt and accounts 2020 notes to the FinanCial statements
depreCiation (Continued)
• Mechanical equipment - over 10 years on a straight line basis with a 10% residual value.
• All other equipment, including vehicles - over 5 years on a straight line basis with a 10% residual value.
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 resources within that area of interest. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and
value-in-use. To determine the value-in-use, management estimate expected future cash flows from each cash-generating unit
and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment
testing procedures are directly linked to the Group’s latest approved budget, resource estimates, and life of mine plan adjusted as
necessary to exclude the effects of future reorganisations and asset enhancements. Estimates and assumptions used in determining
whether an asset has become impaired are set out in note 11.
Impairment assessments are based upon a range of estimates and assumptions:
estimates / assumptions basis
Future production:
Measured and indicated resource estimates together with processing capacity
Commodity prices:
Forward market and longer term price estimates
Exchange rates:
Current market exchange rates
Discount 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 financial
statements in accordance with local requirements which is anticipated to be greater than the actual costs of site restoration.
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 cost 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
Classification
From 1 January 2018, the Group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI or through profit or loss); and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash
flows. For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments in
62
Griffin MininG LiMited notes to the FinanCial statements
FinanCial assets (Continued)
equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the
time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). The
Group reclassifies debt investments when and only when its business model for managing those assets changes.
Classification of financial assets at amortised cost
The Group classifies its financial assets as at amortised cost only if both of the following criteria are met:
•
the asset is held within a business model whose objective is to collect the contractual cash flows; and
•
the contractual terms give rise to cash flows that are solely payments of principal and interest.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to
purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows are solely payment of principal and interest.
Impairment
The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised
cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to
be recognised from initial recognition of the receivables, see note 14 for further details.
Assets carried at amortised cost
For loans and receivables, the amount of the loss was measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses that had not been incurred), discounted at the financial
asset’s original effective interest rate. The carrying amount of the asset will be reduced and the amount of the loss will be
recognised in profit or loss.
If a loan or held-to-maturity investment had a variable interest rate, the discount rate for measuring any impairment loss was the
current effective interest rate determined under the contract. As a practical expedient, the Group could measure impairment on
the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount of the impairment
loss decreased and the decrease could be related objectively to an event occurring after the impairment would be recognised (such
as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss will be recognised in
profit or loss.
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”.
63
RepoRt and accounts 2020 notes to the FinanCial statements
Foreign CurrenCy transaCtions
The financial statements 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, Hong Kong 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 financial statements 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 15 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” represent retained profits and losses.
Non-controlling interests are determined by reference to the underlying agreements, with the allocation of the purchase
consideration on acquisition of non-controlling interests and extension of the Hebei Hua Ao business licence between that
capitalised to mineral interests and that charged to reserves by reference to the impact of future cash flows. Following the
acquisition of Griffin’s Chinese partner’s equity interests in the Hebei Hua Ao Joint Venture in 2012 and a reappraisal of the
arrangements with the Chinese partners, the relationship with them is now in the nature of a service provider facilitating Hebei
Hua Ao’s operations in China rather than that of non-controlling interests. In line with this new arrangement an annual service
charge is paid to the Chinese partners, however, due to the potential variables the Directors are unable to estimate what this will
be in any future year.
64
Griffin MininG LiMited notes to the FinanCial statements
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 31 December 2020 the total expense recognised in profit or loss arising from share based transactions
were Nil (2019: Nil).
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:
Judgements
In assessing potential impairment adjustments and depreciation on a unit of production basis, management have assumed that
indicated as well as measured mineral resources will be recovered from Zones II and III at Caijiaying as good conversion from
inferred to indicated and indicated to measured has been achieved historically. It is further assumed that all necessary permits
will be obtained. In this regard the Company is seeking to convert Hebei Hua Ao from a limited liability joint venture with a
business licence that expires in 2037, to an equity limited liability company with an indefinite term and that its business licence
be renewed without significant cost.
Estimates
Impairment review assumptions, property, plant and equipment (note 11). Impairments are assessed by comparison of the cash
generating unit’s (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 impacted by estimates of:
•
future prices of the commodities extracted. Estimates were made as at the balance sheet date and do not include changes in
future price estimates.
• the expected tonnes and grade of ore mined. Management has assumed an increase in forecast production from current levels
if 0.9 million tonnes per annum to 1.2 million tonnes per annum from 2021 and 1.5 million tonnes per annum thereafter as set
out in the life of mine plan. No alterations to existing processing facilities are required to facilitate the increase in production.
•
•
future zinc treatment costs.
future operating and capital expenditure.
• discount rates calculated using a capital asset pricing model.
65
RepoRt and accounts 2020 notes to the FinanCial statements
signiFiCant judgements and estimates (Continued)
Based on these estimates, the directors have determined that the Group requires the market price of zinc to be above $2,080 per
tonne with gold, silver and lead prices remaining at current prevailing levels, to avoid an impairment charge. It is also conditional
upon continued mining licences and permits being granted, which the directors consider will be maintained or obtained as
appropriate.
Impairment review assumptions, exploration interests (note 12). 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. Non-impairments of all assets is conditional upon continued exploration
licences and permits which the directors consider will be maintained or obtained as appropriate.
Provisions for mine closure and rehabilitation costs have been made in accordance with the laws and regulations of the PRC
and as set out in the Hebei Hua Ao Mine Ecological Restoration Treatment and Land Reclamation Scheme (“the Scheme”) as
approved by Ministry of Natural Resources of the PRC. This Scheme provides for a mine life of 40.11 years from January 2019 to
February 2059. The Scheme incorporates a rehabilitation plan for “Mine Geological Environment Recovery” with an estimated
cost of RMB 65,619,400 ($10,060,000), and “Land Rehabilitation” with an estimated cost of RMB 54,566,100 ($8,360,000).
These amounts have been discounted over the deemed Life of Mine at a discount rate of 3.7596%, being the PRC 40 year state
bond rate.
Interest rate implicit in the lease. Since the interest rate implicit in the lease cannot be readily determined, the lessee’s incremental
borrowing rate is used. The incremental borrowing rate (IBR) applicable for all of the leases for the Group is between 5% and
10%. While there is no definitive guidance in IFRS 16 on how to determine an IBR we are typically observing rates built up from
three components as follows:
a) Risk free rate – a treasury bond rate or an interest swap rate in the local currency for the country of the lease, which reflects
the duration of the lease;
b) Credit spread specific to the lessee; and
c) Asset/lease specific adjustments to reflect the nature of the collateral.
The determination of whether there is an interest rate implicit in the lease, the calculation of the Group’s incremental borrowing
rate, and whether any adjustments to this rate are required, involves some judgement and is subject to change over time. At the
commencement date of leases management consider whether the lease term will be the full term of the lease or whether any
option to break or extend the lease is likely to be exercised. Leases are regularly reviewed and will be revalued if the term is likely
to change.
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 financial statements.
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 Board meeting prior to the reporting date.
66
Griffin MininG LiMited notes to the FinanCial statements
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.
segment reporting
In identifying its operating segments, management generally follows the Group’s service lines, which represent the main products
produced by the Group. Management considers 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 director to the Board 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 10 for the depreciation methods and useful lives for assets
held under leases. The interest element of lease payments is charged to profit or loss, as finance costs over the period of the lease.
67
RepoRt and accounts 2020 notes to the FinanCial statements
2. segmental reporting
The Group has one business segment, the Caijiaying zinc gold mine in the People’s Republic of China. All revenues and costs of
sales in 2020 and 2019 were derived from the Caijiaying zinc gold mine.
REVENUE
China
Zinc concentrate sales
Lead and precious metals concentrate sales
Royalties and resource taxes
COST OF SALES: CHINA
Mining costs
Haulage costs
Processing costs
Depreciation (excluding depreciation in administration expenses)
(Decrease) / Increase in stocks
ADMINISTRATION EXPENSES
China
Australia
UK / Bermuda
2020
$000
75,403
53,095
25,999
(3,691)
75,403
16,056
7,282
8,868
11,780
(1,249)
42,737
12,939
312
4,267
17,518
2019
$000
82,267
55,627
29,850
(3,210)
82,267
17,652
8,277
10,019
11,462
1,199
48,609
14,253
414
4,766
19,433
All revenues, cost of sales and operating expenses charged to profit relate to continuing operations and are allocated by
receipt / payment location.
TOTAL ASSETS
China
Australia
UK / Bermuda
CAPITAL EXPENDITURE
China
Australia
UK / Bermuda
3. proFit From operations
Profit from operations is stated after charging
Fees for the audit of the Company
Fees for the audit of subsidiaries
Staff costs
Service fees to Zhangjiakou Yuanrun Enterprise Management
Average number of persons employed by the Group in the year
68
290,147
967
4,363
295,477
24,375
-
5
24,380
2020
$000
165
82
8,324
3,320
No.
435
248,119
686
5,389
254,194
27,076
65
4
27,145
2019
$000
142
129
8,668
3,989
No.
431
Griffin MininG LiMited
notes to the FinanCial statements
4. direCtors’ and key personnel remuneration
The following fees and remuneration were receivable by the Directors holding office and key personnel engaged during the year:
Fees Salary
Pension Total
2020
contributions
Fees
Salary
basic
Salary
bonus
Pension Total
2019
contributions
$000
$000
$000
$000
$000
$000
$000
$000
$000
Mladen Ninkov*
Dal Brynelsen
Rupert Crowe
Roger Goodwin
Adam Usdan
201
262
114
201
84
-
-
-
402
-
-
-
-
38
-
201
262
114
641
84
Total
862
402
38 1,302
212
271
134
212
84
913
-
-
-
399
-
399
Key personnel
61
1,831
16 1,908
55
1,729
923
2,233
54 3,210
968
2,128
-
-
-
66
-
66
-
66
-
-
-
38
-
212
271
134
715
84
38
1,416
15
53
1,799
3,215
Key personnel comprise individuals in senior management positions.
*Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received fees
under a consultancy agreement of $2,801,000 (2019: $2,598,000), 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.
No share options were granted to or exercised by the directors in 2020 or 2019.
5. losses on disposal oF plant and equipment
Losses on disposal of plant and equipment
6. FinanCe inCome
Interest on bank deposits
7. FinanCe Costs
Interest payable on short term bank loans
Interest on rehabilitation provisions
Finance lease interest
8. other inCome
Scrap and sundry other sales
2020
$000
1,129
2020
$000
108
2020
$000
111
77
171
359
2020
$000
735
2019
$000
305
2019
$000
171
2019
$000
51
-
326
377
2019
$000
76
69
RepoRt and accounts 2020
notes to the FinanCial statements
9. inCome tax expense
Profit for the year before tax
2020
$000
14,515
Expected tax expense at a standard rate of PRC income tax of 25% (2019: 25%)
3,629
Adjustment for tax exempt items:
- Income and expenses outside the PRC not subject to tax
Adjustments for short term timing differences:
- In respect of accounting differences
Adjustments for permanent timing differences other
Withholding tax on intercompany dividends and charges
Current taxation expense
Deferred taxation expense / (credit)
Correction of provision brought forward
Origination and reversal of temporary timing differences
Total tax expense
567
(298)
1,051
232
5,181
-
424
424
5,605
2019
$000
11,712
2,929
746
(234)
1,757
50
5,248
18
362
380
5,628
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 2020 (25% in 2019) based upon the profits calculated under Chinese Generally Accepted Accounting Principles
(Chinese “GAAP”).
Withholding tax is recognised as a current tax charge when paid. As the Company can control the timing of payments giving
rise to withholding tax, deferred tax liabilities for unpaid withholding taxes on unremitted earnings and undistributed dividend
payments are recognised using a ‘probable’ threshold (based on the recognition threshold in IAS 12) , and are reflected at the
amount expected to be paid to taxation authorities. Unremitted earnings and undistributed dividend payments from the Group’s
Chinese mining operation total US$109.6m (2019: $108.6).
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:
Earnings
$000
2020
Weighted
Average
Per
share
number of amount
(cents)
shares
2019
Earnings Weighted
Average
$000
Per
share
number of amount
(cents)
shares
Basic earnings per share
Earnings attributable to ordinary shareholders
Dilutive effect of securities
Options
8,910
172,788,420
5.16
6,084
172,748,831
3.52
-
9,861,227
(0.28)
-
15,107,500
(0.28)
Diluted earnings per share
8,910
182,649,647
4.88
6,084
187,856,331
3.24
70
Griffin MininG LiMited
notes to the FinanCial statements
11. property, plant and equipment
At 1 January 2019
Foreign exchange adjustments
Additions during the year
Change in estimate of mine closure costs
Adjustment for adoption of IFRS16 leases
Adjustment for change in lease accounting estimate
Disposals
Depreciation charge for the year
At 1 January 2020
Foreign exchange adjustments
Additions during the year
Provision for licence transfer fees
Change in estimate of mine closure costs
Transfer of rehabilitation provision
Disposals
Depreciation charge for the year
Mineral
Mill and
interests mobile mine
equipment
Offices,
furniture &
equipment
Total
$000
167,338
(1,611)
18,883
(115)
-
-
-
(6,912)
177,583
8,292
18,691
16,338
(115)
697
-
(6,542)
$000
45,747
(786)
8,193
-
-
2,792
(305)
(5,268)
50,373
3,408
5,684
-
-
(697)
(1,085)
(6,084)
$000
$000
55
-
69
-
370
-
-
213,140
(2,397)
27,145
(115)
370
2,792
(305)
(163)
(12,343)
331
228,287
5
5
-
-
-
-
11,705
24,380
16,338
(115)
-
(1,085)
(175)
(12,801)
At 31 December 2020
214,944
51,599
166
266,709
At 31 December 2018
Cost
Accumulated depreciation
Net carrying amount
At 31 December 2019
Cost
Accumulated depreciation
Net carrying amount
At 31 December 2020
Cost
Accumulated depreciation
Net carrying amount
205,840
(38,502)
167,338
222,589
(45,006)
177,583
267,763
(52,819)
214,944
72,028
(26,281)
45,747
80,935
(30,562)
50,373
90,173
(38,574)
51,599
134
(79)
55
278,002
(64,862)
213,140
573
(242)
331
304,097
(75,810)
228,287
583
(417)
166
358,519
(91,810)
266,709
Mineral interests comprise the Group’s interest in the Caijiaying ore bodies including costs on acquisition, plus subsequent
expenditure on licences, concessions, exploration, appraisal and construction of the Caijiaying mine including expenditure
for the initial establishment of access to mineral reserves, commissioning expenditure, and direct overhead expenses prior to
commencement of commercial production and together with the end of life restoration costs.
Mill and mobile mine equipment includes $3,872,000 (2019: $1,997,000) of assets under construction yet to be depreciated.
The offices, furniture and equipment disclosed above relates solely to the fixed assets, including leased offices, of Griffin Mining
(UK Services) Limited and China Zinc Pty Limited.
71
RepoRt and accounts 2020
notes to the FinanCial statements
11. property, plant and equipment (Continued)
During 2013 plant and equipment with a deemed value of $11,381,000, revalued in 2019 to $14,150,000, were acquired under
a finance lease, upon which depreciation of $6,712,000 (2019: $5,123,000) has been provided. At 31 December 2019 the net
carrying amount of this equipment was $8,417,000 (2019: $9,027,000). In 2019 the London office lease was capitalised to comply
with IFRS16 with a deemed value of $371,000 upon which depreciation of $248,000 has been provided. At 31 December 2020
the net carrying amount of this office was $124,000 (2019: $247,000).
The Group assesses the carrying value of the mineral interests, mill and mobile mine equipment at least annually, and more
frequently in the event of any indications of impairment, by reference to discounted cash flow forecasts of future revenue and
expenditure for each business segment. These forecasts are based upon both past and expected future performance, available
resources and expectations for future markets. Management determined there were no impairment indicators at 31 December
2020. However, as best practice management have updated the impairment model.
In determining any indications of impairment in the carrying value of the Caijiaying Mine the directors have reassessed the net
carrying value of capitalised costs at 31 December 2020 by reference to the estimated mineral resources at Caijiaying that may be
extracted by 2056 and 2037 when the current business licence of Hebei Hua Ao expires. However, it is expected that Hebei Hua Ao
will be converted to an equity joint venture company with an indefinite life before then. Accordingly a Life of Mine plan (“LOM”)
has been prepared by the Company that indicates the continued extraction of ore until 2056. In estimating the discounted future
cash flows from the continuing operations at the Caijiaying mine the following principal assumptions have been made:
• Future market prices for zinc of $2,500 per tonne, gold of $1,800 per troy ounce and silver of $20 per troy ounce;
• Zinc treatment charges of 30% of market prices;
• Extraction of measured and indicated resources of 25.5 million tonnes to 2037 when the current business licence of Hebei
Hua Ao expires, with ore mined and processed rising to a maximum rate of 1.6 million tonnes of ore per annum;
• Operating costs, recoveries and payables based upon past performance and that budgeted for 2021;
• Capital costs based upon that initially scheduled with sustaining capital based on future scheduling;
• Discount rate of 10%;
• Continued maintenance and grant of applicable licences and permits; and
• No significant impact as a result of climate change, earthquakes or other natural events.
12. intangible assets - exploration interests
China – mineral exploration interests
At 1 January 2019
Foreign exchange adjustments
Additions during the year
Impairment during the year
At 31 December 2019
Foreign exchange adjustments
Additions during the year
Impairment during the year
At 31 December 2020
$000
2,016
(17)
308
(1,985)
322
2
11
(10)
325
Intangible assets represent costs on acquisition, plus subsequent expenditure on licences, concessions, exploration, appraisal
and development work in respect to regional exploration in China. Where expenditure on an area of interest is determined as
unsuccessful such expenditure is written off to profit or loss. The recoverability of these assets depends, initially, on successful
appraisal activities, details of which are given in the report on operations. The outcome of such appraisal activity is uncertain.
Upon economically exploitable mineral deposits being established, sufficient finance will be required to bring such discoveries
into production. At 31 December 2020 impairment charges of $10,000 (2019: $1,985,000) had been provided and charged to the
income statement in respect of the above exploration costs previously capitalised by Hebei Sino Anglo.
72
Griffin MininG LiMited
notes to the FinanCial statements
13. inventories
Underground ore stocks
Surface ore stocks
Concentrate stocks
Spare parts and consumables
2020
$000
1,332
423
728
2,850
5,333
All inventories are expected to be sold, used or consumed within one year of the balance sheet date.
14. reCeivables and other Current assets
Trade receivables
Other receivables
Prepayments
2020
$000
4,485
338
1,852
6,675
2019
$000
530
288
300
2,721
3,839
2019
$000
-
360
1,501
1,861
Any expected credit losses on the recoverability of receivables are not expected to be material.
15. share Capital
AUTHORISED:
2020
2019
Number
$000
Number
$000
Ordinary shares of US$0.01 each
1,000,000,000
10,000
1,000,000,000 10,000
CALLED UP ALLOTTED AND FULLY PAID:
Ordinary shares of US $0.01 each
At 1 January
172,786,228
1,728
172,748,728
1,727
Shares issued in the year on exercise of share purchase options
40,000
-
37,500
1
At 31 December
172,826,228
1,728
172,786,228
1,728
Share purchase options were exercised over 40,000 new ordinary shares at 40 pence per share in 2020 (2019: options over 37,500
new ordinary shares were exercised at 30 pence per share.)
16. shares held in treasury
At 1 January
2020
Number
$000
540,000
917
2019
Number
540,000
$000
917
Bought back in during the year
-
-
-
-
At 31 December
540,000
917
540,000
917
In 2018 540,000 of the Company’s ordinary shares were purchased at an average price of 126.2p.
73
RepoRt and accounts 2020
notes to the FinanCial statements
17. share options
At 1 January
2020
Number
Granted/
(exercised)
Number
At 31 December
2020
Number
Options exercisable at 30 pence per share to 31 December 2022
17,374,166
Options exercisable at 40 pence per share to 31 December 2022
4,833,333
22,207,499
-
(40,000)
(40,000)
17,374,166
4,793,333
22,167,499
Share purchase options were exercised over 40,000 new ordinary shares in 2020 (2019: options over 37,500 new ordinary shares
were exercised at 30 pence per share.)
The following table shows the number and weighted average exercise price of all the unexercised share options and warrants at
the year end:
2020
2019
Number Weighted average
exercise price
Pence
Number Weighted average
exercise price
Pence
Outstanding at 1 January
Exercised during the year
Outstanding at 31 December
22,207,499
(40,000)
22,167,499
32.2
(40.0)
32.2
22,244,999
(37,500)
22,207,499
32.5
(30.0)
32.2
The estimated value of the options exercisable at 40p up to 31 December 2022, which vested in 3 tranches of 1,666,667 each,
were 7.4p, 7.9p and 8.4p.
The estimated value of the options exercisable at 30p up to 31 December 2022, which vested in 3 tranches of 6,666,666 each,
were 6.2p, 7.2p and 6.8p.
Inputs into the Binomial valuation model were as follows:
Share price
Exercise price
Expected volatility
Risk free yield
Dividend yield
Options expiring
31 December 2022
Options expiring
31 December 2022
26.5p
30.0p
35%
0.9%
0%
33.0p
40.0p
36%
1.3%
0%
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 (2019: $nil) during the year ended 31 December 2020 relating to equity settled
share option scheme transactions.
18. dividends
No dividends were paid in 2020 (2019: nil).
19. other payables
PRC licence fees
74
2020
$000
13,487
2019
$000
2,302
Griffin MininG LiMited
notes to the FinanCial statements
20. long-term provisions
PROVISIONS FOR MINE CLOSURE COSTS
At 1 January
Change in estimate (note 10)
Interest charges
Foreign exchange adjustments
At 31 December
2020
$000
2,150
(115)
77
88
2,200
2019
$000
2,302
(115)
-
(37)
2,150
Provisions for mine closure and rehabilitation costs have been made in accordance with the laws and regulations of the PRC
and as set out in the Hebei Hua Ao Mine Ecological Restoration Treatment and Land Reclamation Scheme (“the Scheme”) as
approved by Ministry of Natural Resources of the PRC. This Scheme provides for a mine life of 40.11 years from January 2019 to
February 2059. The Scheme incorporates a rehabilitation plan for “Mine Geological Environment Recovery” with an estimated
cost of RMB 65,619,400 ($10,060,000), and “Land Rehabilitation” with an estimated cost of RMB 54,566,100 ($8,360,000).
These amounts have been discounted over the deemed Life of Mine at a discount rate of 3.7596%, being the PRC 40 year state
bond rate.
In 2019 and prior years, provision for mine closure and rehabilitation costs had been made in accordance with the then prevailing
laws and regulations of the PRC at a rate of Rmb 0.5 per tonne of estimated resources.
21. deFerred taxation
At 1 January
Foreign exchange adjustments
Charge for the year
Credit re prior years
At 31 December
2020
$000
2,731
204
424
-
3,359
2019
$000
2,393
(42)
362
18
2,731
Deferred taxation is provided in full on temporary timing differences under the liability method using a tax rate of 25%.
The deferred taxation provision arises on accelerated depreciation in the PRC deductible for taxation purposes.
22. lease liabilities
At 1 January
Foreign exchange adjustments
Advance during the period
Adjustment for change in accounting policy (note 10)
Adjustment for change in accounting estimate on finance lease (note 10)
Interest charges
Repayments in the year
At 31 December
Amounts falling due in more than one year
Amounts falling due within one year
2020
$000
2,600
81
-
-
-
171
(2,469)
383
-
383
383
2019
$000
1,809
(31)
65
404
2,792
323
(2,762)
2,600
479
2,121
2,600
75
RepoRt and accounts 2020
notes to the FinanCial statements
22. lease liabilities (Continued)
Under the terms of an agreement Hebei Hua Ao pays Rmb21.32 per wet tonne treated by the 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. During the year the deemed value and liability was reappraised to take account of additional and continued use
of the facility.
The Company entered into an agreement in October 2016 to rent offices for 12 years from 1 November 2016 with a five year break.
As required under IFRS 16 the Group have recognised a right to use assets in respect of this lease having a value of $371,000 as at 1
January 2019 with a depreciation of $248,000 provided in the year, and a liability of $97,000 all of which is current.
Minimum lease payments on leases entered into by the Group are as follows:
Within one year
Between 1 and 2 years
Between 2 and 3 year
Between 3 and 4 years
Between 4 and 5 years
Later than 5 years
23. trade and other payables
Trade creditors
Other creditors
Taxation payable
Zhangjiakou Yuanrun Enterprise Management Consulting Service Co., Ltd
Accruals
2020
$000
490
12
0
0
0
0
502
2020
$000
13,821
7,624
5,120
4,246
11,531
42,342
2019
$000
2,778
467
11
0
0
0
3,256
2019
$000
13,522
2,629
3,584
4,585
7,449
31,769
All amounts are short term. The carrying values of all trade and other payables are considered to be a reasonable approximation
of fair value.
24. attributable net asset value per share to total equity per holders
oF parent shares
The attributable net asset value / total equity per share has been calculated from the consolidated net assets / total equity of the
Group at 31 December 2020 of $233,706,000 ($214,944,000 at 31 December 2019) divided by the number of ordinary shares
in issue at 31 December 2020 of 172,826,228 (172,786,228 at 31 December 2019).
25. 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.
76
Griffin MininG LiMited
notes to the FinanCial statements
25. risk management (Continued)
Foreign Currency Risk
The majority of the Group’s operational and financial cash flows are denominated in Chinese Renminbi and United States Dollars
with Sterling, Hong Kong dollars, and Australian Dollar 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 formal foreign currency hedging policy but retains foreign currency to meet future
requirements. Management monitors foreign exchange exposure and considers hedging significant foreign currency exposure
should the need arise. 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 Peoples Republic of China.
Sterling bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2020
$000
1,270
Australian dollar bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2020
$000
909
Renminbi bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2020
$000
7,420
2019
$000
1,964
2019
$000
628
2019
$000
13,650
The following table illustrates the sensitivity of the net results for the year and equity with regards to the Group’s sterling deposits
and the sterling US Dollar exchange rate. It assumes a + / - 10% (2019: 10%) change in the sterling exchange rate for the year
ended 31 December 2020. These changes are considered to be reasonable based on observation of current market conditions for
the year ended 31 December 2020. 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% (2019: 10%) this would have had the following impact:
Net result for the year and on equity
2020
$000
141
If sterling had weakened against the US Dollar by 10% (2019: 10%) this would have the following impact:
Net result for the year and on equity
2020
$000
(115)
2019
$000
220
2019
$000
(180)
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.
77
RepoRt and accounts 2020
notes to the FinanCial statements
25. risk management (Continued)
Foreign Currency Risk (continued)
Foreign currency denominated financial assets and liabilities, translated into US Dollars at the closing rate, are as follows:
2020
Rmb
$000
GBP
$000
AusD
$000
GBP
$000
2019
Rmb
$000
1,470
17,945
967
2,173
16,003
(414)
(51,399)
(152)
(475)
(29,177)
1,056
(33,454)
815
1,698
(13,174)
AusD
$000
632
(75)
557
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 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% (2019: + 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
2020
2019
Plus 300% Minus 100%
Plus 300% Minus 100%
$000
296
$000
(108)
$000
434
$000
(145)
Fixed and non interest bearing financial assets and liabilities are as follows:
2020
2019
Floating Non interest
bearing
interest rate
Total
Floating Non interest
bearing
interest rate
Total
$000
$000
$000
$000
$000
$000
16,435
-
16,435
19,885
-
19,885
-
6,675
6,675
-
1,861
1,861
Financial Assets
Cash at bank
Other receivables
Total Financial Assets
16,435
6,675
23,110
19,885
1,861
21,746
Finance lease liabilities
(383)
-
(383)
(2,544)
-
(2,544)
Trade and other payables
-
(55,829)
(55,829)
-
(28,185)
(28,185)
Total Financial Liabilities
(383)
(55,829)
(56,212)
(2,544)
(28,185)
(30,729)
Net Financial assets / (liabilities)
16,052
(49,154)
(33,102)
17,341
(26,324)
(8,983)
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 2020 or in 2019.
78
Griffin MininG LiMited
notes to the FinanCial statements
25. risk management (Continued)
Commodity Risk (continued)
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 30% and minus 30% (2019: plus 30% and minus 30%), 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 result for the year – zinc
Net result for year – gold
Net result for year – silver
Credit risk
2020
2019
Plus 30% Minus 30%
Plus 20% Minus 20%
$000
$000
$000
$000
11,707
(11,707)
12,264
(12,264)
4,440
1,162
(4,440)
(1,162)
5,252
(5,252)
1,034
(1,034)
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. Investment of surplus funds are made
only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed
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.
Liquidity risk
Prudent liquidity risk management implies maintaining cash, marketable securities and adequate credit facilities to meet financial
obligations as they fall due. At 31 December 2020 the Group held cash and cash equivalents (bank deposits) with high credit
financial institutions of $16,435,000 (2019 $19,885,000) to meet financial obligations and apart from lease, trade and other
payables had no bank loans or similar financial liabilities. See note 22.
Management monitors rolling cash flow forecasts on a weekly basis and keeps under review bank financing facilities at a local and
Group level, to ensure sufficient liquidity is maintained to meet future financial obligations. This also includes regular review of
metal market prices and foreign currency requirements.
26. 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 $233,706,000 at 31 December 2020.
79
RepoRt and accounts 2020
notes to the FinanCial statements
27. 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, the United Kingdom, Hong Kong 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
Cash and cash equivalents
FINANCIAL LIABILITIES
Financial liabilities at amortised cost
Trade and other payables
Contractual maturities of financial liabilities:
2020
$000
16,435
16,435
17,242
33,850
51,092
2019
$000
19,885
19,885
2,600
28,185
30,785
At 31 December 2019
Within
1 year
Between 1
and 2 years
Between 2
and 3 years
Over
3 years
Total contractual
cash flows
Carrying amount
(assets)/liabilities
$000
$000
$000
$000
$000
Non-derivatives
Payables
Lease liabilities
Total non-derivatives
31,769
2,778
34,547
-
467
467
Derivatives
-
-
-
11
11
-
-
-
-
-
31,769
3,256
35,025
-
$000
31,769
2,600
34,369
-
At 31 December 2020
Within
1 year
Between 1
and 2 years
Between 2
and 3 years
Over
3 years
Total contractual
cash flows
Carrying amount
(assets)/liabilities
$000
$000
$000
$000
$000
$000
Non-derivatives
Payables
Lease liabilities
Total non-derivatives
40,052
490
40,542
3,372
12
3,384
3,372
6,744
-
-
3,372
6,744
53,540
502
54,042
53,540
383
53,923
Derivatives
-
-
-
-
-
-
80
Griffin MininG LiMited
notes to the FinanCial statements
28. subsidiary Companies
At 31 December 2020, Griffin Mining Limited had interests in the share capital of the following principal subsidiary companies.
Name
China Zinc Pty Ltd
China Zinc Ltd
China Zinc (Resources) Ltd
Class of
Share held
Ordinary
Ordinary
Ordinary
Griffin Mining (UK Services) Limited Ordinary
Hebei Hua Ao Mining
Industry Company Ltd*
Panda Resources Ltd
Ordinary
Hebei Sino Anglo Mining
Development Company Ltd*
Proportion of
shares held
Nature of
business
Country of
incorporation
100%
100%
100%
100%
88.8% **
100%
90%
Service company
Australia
Holding and service company
Hong Kong
Holding company
Hong Kong
Service company
England
Base and precious metals
mining and development
Holding company
Mineral exploration
and development
China
England
China
* China Zinc Pty Ltd, China Zinc Ltd, Griffin Mining (UK Services) Ltd and Panda Resources Ltd are directly owned by the
Company. China Zinc Ltd has a 100% interest in China Zinc (Resources) Ltd and 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 provides that the foreign party
(China Zinc) receives 88.8% of the cash flows and profits of Hebei Hua Ao in accordance with its share in the equity interest in
the joint venture. The term of the joint venture’s business licence expires on 12 October 2037. Under the terms of an agreement
dated 21 May 2012, Griffin’s Chinese Partners are obliged to provide various services to facilitate Hebei Hua Ao’s operations
in China and as such the amounts payable of $2,934,000 (2019: $3,613,000) are included in net operating costs rather than
attributable to non-controlling interests. Likewise, the amounts due at 31 December 2020 of $4,246,000 (2019: $4,664,000)
are included in other payables rather than due to non-controlling interests within equity within the Consolidated Statement of
Financial Position.
29. Commitments
At 31 December 2020 the Group had capital commitments of $1,395,000 (31 December 2019: $528,000).
30. related parties
Keynes Capital
Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received fees
under a consultancy agreement of $2,801,000 (2019: $2,598,000), for the provision of advisory and support services to Griffin
Mining Limited and its subsidiaries during the year including that of the Chairman Mladen Ninkov. Mladen Ninkov is a director
and employee of Keynes Investments Pty Limited.
Zhangiakou Yuanrun Enterprise Management and Service Centre
During the year $3,320,000 was charged (2019: $3,989,000) for services paid to Zhangjiakou Yuanrun Enterprise Management
and Service Centre, the Group’s joint venture partner in Hebei Hua Ao in connection with local PRC licensing and permitting
requirements and land acquisitions. At 31 December 2020 $4,246,000 (2019: $3,613,000) was due to this company.
31. post balanCe sheet events
At 31 December 2020 there were no adjusting post balance sheet events (2019: none). Since 31 December 2020 the Company
has bought in 316,840 shares to be held in treasury at a cost of £584,000.
81
RepoRt and accounts 2020
82
Griffin MininG LiMited Caijiaying Mine Site Winter 2020 / 2021
83
RepoRt and accounts 2020 Corporate inFormation
Griffin Mining (UK Services Ltd)
8 Floor, Royal Trust House, 54 Jermyn Street, London, SW1Y 6LX, UK.
office:
Telephone: + 44 (0)20 7629 7772 Facsimile: + 44 (0)20 7629 7773
Email: griffin@griffinmining.com
Web site: www.griffinmining.com
Griffin Mining Ltd Registered office: Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda.
China Zinc Pty Ltd office:
Level 9, BGC Centre, 28 The Esplanade, Perth, WA 6000, Australia.
Telephone: + 61(0)8 9321 7143 Facsimile: + 61(0)8 9321 7035
China Zinc Limited office:
18/F, Wai Wah Commercial Centre, 6 Wilmer Street, Sheung Wan, Hong Kong.
Directors:
Mladen Ninkov (Chairman)
Roger Goodwin (Finance Director)
Dal Brynelsen
Adam Usdan
Company Secretary:
Roger Goodwin
Nominated Adviser
And Broker for AIM:
Panmure Gordon (UK) Limited
One New Change, London, EC4M 9AF, UK.
Joint Broker:
Joh, Berenberg, Gossler & Co. KG
60 Threadneedle Street, London, EC2R 8HP, UK.
Independent Auditors:
PricewaterhouseCoopers LLP
1 Embankment Place, London, WC2N 6RH, UK.
Solicitors:
Bird and Bird
8/F China World Office 1, Jianguomenwai Dajie,
Chao Yang District, Beijing, 10004, PRC.
Bird and Bird LLP
12 Fetter Lane, London, EC4A 1JP
Conyers Dill & Pearman
Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda.
Addleshaw Goddard LLP
Milton Gate, 60 Chiswell Street, London, EC1Y 4AG, UK.
Bankers:
HSBC Bank plc
27-32 Poultry, London EC2P 2BX, UK.
The Hong Kong and Shanghai Banking Corporation Limited
HSBC M ain Building, 1 Queen’s Road, Central, Hong Kong.
HSBC Bank of Bermuda Ltd
6 Front Street, Hamilton, HM11, Bermuda.
UK Registrars
Link Market Services (Jersey) Limited
And Transfer Agents:
12 Castle Street, St Helier, Jersey, JE2 3RT, UK.
84
Griffin MininG LiMited