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
clImate chanGe
COrpOrate gOvernanCe
report oF the audIt commIttee
report oF the remuneratIon commIttee
direCtOrs - griFFin mining ltd
direCtOrs and seniOr exeCutives - hebei hua aO
direCtOrs’ repOrt
independent auditOrs’ repOrt
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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96
Griffin Mining Limited (“Griffin” or “the Company”) 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’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: 8th Floor, 54 Jermyn Street, London. SW1Y 6LX
1
RepoRt and accounts 2022
2
Griffin MininG LiMited Rehabilitated tailings facilities 1 and 2 with foundations and posts awaiting installation
of solar panels for generation of solar power for the Caijiaying Mine.
3
RepoRt and accounts 2022 Chairman’s statement
As usual, it gives me a great sense of pride and pleasure
the 1000RL at Zone III, the resource drilling in Zone
to present to you, the shareholders of Griffin Mining
II, further exploration at Zones V & VIII, exploration
Limited (“Griffin” or the “Company”), the Annual Report
drilling out to the far eastern boundary of the Caijiaying
and Accounts of the Company for the 2022 calendar and
Mine’s mining licence area and the possibility that virgin
financial year (the “Annual Report”).
exploration tenements will be granted over other areas.
Taking into consideration that operations were suspended
With the growing cash balances of the Company and the
at the Caijiaying Mine for a full 5 months due to, initially,
increasing cash generating capacity of the Caijiaying Mine,
the Chinese Lunar New Year holiday celebrations, the
and with the relatively recent addition of new directors,
Winter Olympics and the Winter Paralympics and,
discussions have intensified concerning the strategic
subsequently, the Chinese Communist National Party
direction of the Company’s future. These discussions have
Congress, the Company was still able to generate its 18th
been, and will continue to be, wide ranging and include
continuous operating profit for the year and its 17th net
dividends, share buybacks in various forms, rationalisation
profit, whilst currently holding $47 million in cash and no
and realisation of asset value, acquisitions and joint or
debt.
primary listings on other stock exchanges. It is expected
that these issues will take centre stage at board level this
Of course, the most significant operational and financial
year.
milestone of 2022 was the fulfilment of the Company’s
long held aim of having the Caijiaying Mine run at an
I am fully aware that the value of the Company’s assets
annualised production throughput of 1.5 million tonnes
have not yet been reflected in the share price and that it has
per annum. This was achieved and has been maintained
taken an inordinate amount of time to do so. Such is the
since the restart of operations post the Chinese Communist
nature of operating at the infancy of mining in a foreign
National Party Congress in November 2022. A record of
country, the dwindling profile of the London Stock Market
136,000 tonnes of ore were processed in December 2022
and the disappearance of the retail investor as capital is
and the 1st quarter of 2023 was a record for the 1st quarter
squeezed in less and less hands, mainly institutional, driven
of any year since the commissioning of the Caijiaying Mine
by Environment Sustainability and Governance (“ESG”)
in 2005. The implications of this achievement cannot
and other non-financial concerns.
be underestimated and are already being reflected in the
financial results of the Company in 2023.
Although the following may sound trite, I do not mean it
to be. Mining is facing a critical, if not insurmountable,
What makes
these operational results even more
supply problem. The danger is real and frightening. The
remarkable is that not one tonne of ore was sourced from
easily found deposits of all metals have been discovered and
Zone II. All ore was obtained from the traditional mining
generally mined over the past 100 years. The non-carbon
area of Zone III. With the approval by the Hebei Provincial
future will require large amounts of capital for advanced
Emergency Response Bureau of the Mine Design for Zone
exploration techniques and drilling. The projected time
II, including the expansion of the production throughput
from exploration discovery to production, even in a perfect
rate, it can only portend what is yet to come when Zone II
world, is now estimated to be over 30 years and that does
is fully developed and slotted into the production profile.
not take into consideration native title and ESG issues.
The decision by the government of the People’s Republic
of China (“PRC”) to allow the Covid-19 epidemic to be
considered at an end and the subsequent re-opening of the
With just one wind turbine requiring 4 tonnes of zinc, I
remain convinced the value of the Caijiaying Mine will be
fully revealed in this surge for metals.
PRC’s borders with the rest of the world in late 2022, has
As a result, and without knowing the Company’s, my
allowed normal staffing and transport to commence with
or anyone else’s future, it would be remiss of me not to
materials and services becoming normalised. Consequently,
thank everyone who has been involved with the success
exploration has recommenced at the Caijiaying Mine and
of the Company. It has been a unique, extraordinary and
the likelihood that exploration tenements will begin to be
memorable experience. Billions of dollars of metal value
issued in Hebei and the southern provinces of the PRC has
have been discovered and added to the Company’s resource
become more positive. This will include exploration below
inventory. The Company has been the sole trailblazer for
4
Griffin MininG LiMited foreign mining in China. Extraordinary men have done
With production running at an annualized 1.5 million
extraordinary things with little to no recognition by people
tonne throughput since November 2022 through to
who have no idea of how to create value, how difficult it
the date of this statement, I predict 2023 will break all
has traditionally been to operate in China, mining and,
operating and financial records for the Company including
sadly, the bonds of friendship.
I hesitate to name anyone individually for their contribution
as it immediately leads to forgetting someone and causing
offence. But I am going to repeat what I wrote last year,
tonnes mined, hauled, processed and zinc, gold, silver and
lead produced. I look forward to being able to deliver that
news as the year progresses.
because I can’t do better this year, that I will always be
Mladen Ninkov
enormously grateful and humbled by the contribution
Chairman
and camaraderie of the directors, whom I’m proud to
9 May 2023
call “my friends”, gave so freely, warmly, genuinely and
passionately. It made this impossible dream possible
and bearable and I shall always be so grateful I had this
journey with these amazing individuals – the deceased and
irreplaceable Rupert Crowe and the deceased legend Bill
Mulligan, the mining royalty that is Dal Brynelsen, who
never tires of taking my calls, and the indefatigable Roger
Goodwin who continues to do the work of 3 men. Thank
you also to Adam Usdan who stood the ultimate test of
time.
The remainder of the list is endless. Our Chinese joint
venture partners and their past and current directors,
particularly Jin Shengchang. Our past directors, our past
ex pat personnel and Operations Managers and Chief
Operating Officers. Our past and present China Heads,
Dr Bo Zhou and Dr Jeff Sun. Our Australian contractors,
particularly CSA Australia who provided so many of our
geological support and staff and Ausino, led by Campbell
Powell. Our Chinese mining and haulage contractors.
Chinese staff, contractors and government departments.
The current and past staff of the London office of the
Company and the Perth office of Keynes Capital. John
Steel, our Chief Operating Officer, Paul Benson, our Chief
Geologist and Wendy Zhang, our site Chief Financial
Officer, for all their efforts, including, travelling and
quarantining in China and Australia for months during
the Covid-19 pandemic. Partners, spouses, children and
everyone who came into the orbit of the Company.
Lastly to Peg, my wife, and my 3 children Natasha, Stevan
and Tatiana. How they put up with my absences, travel,
set-backs, stress and relentless telephone and Zoom calls
at ridiculous hours of the day and night is beyond me.
Never a word of complaint and always delighted to have
me home. I’m speechless.
5
RepoRt and accounts 2022 overview
Griffin Mining Limited (“Griffin” or “the Company”)
The Company also holds a 90% interest in Hebei Sino
is a mining and investment company, incorporated in
Anglo Mining Development Company Limited (“Hebei
Bermuda whose shares were admitted to trading on the
Anglo”), which has interests in exploration licences
Alternative Investment Market of the London Stock
immediately surrounding the Hebei Hua Ao licence area.
Exchange (“AIM”) in 1997.
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
subsidiary, China Zinc Limited (“China Zinc”), which
holds licences, the operating mine and processing facilities
(the “Caijiaying Mine”) near Zhangjiakou City in the
People’s Republic of China (“PRC” or “China”).
The Company has held an interest in Hebei Hua Ao
since 1997 having financed, explored and managed the
development of the Caijiaying Mine from the discovery
of mineralisation to currently extracting and processing
the annualised equivalent of 1.5 million tonnes of ore per
annum to extract primarily zinc, gold, silver, and lead in
concentrate.
These tenements are currently held by Hebei Anglo’s
joint venture partner, Zhangjiakou Yuanrun Enterprise
Management Consulting Service Co., Ltd (“Yuanrun”),
thereby allowing their retention under PRC law within the
Hebei Anglo Group. Should a mining licence be granted
over this area at any point in the future, Hebei Anglo
has a contractual option to have the new mining licence
transferred back to Hebei Anglo.
The Company continues to aggressively explore, expand,
and develop the Caijiaying Mine whilst also investigating
potential acquisitions of mining projects that are capable,
through either advanced exploration or mining expertise,
of being brought into production to meet the Company’s
historically pre-set, 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 the Hebei Province of the
will have significant benefits for the Company including all
resolutions of the board of Directors becoming passable by
a majority vote and the abolition of the termination of the
current joint venture in 2037 with the new limited liability
company having an indefinite term.
PRC. The Caijiaying Mine is easily accessible by freeway
In January 2004, a second contractual joint venture
from Beijing. The site has significant water supplies, two
company, Hebei Anglo, was formed to hold the mineral
35,000 volt power lines connected to the electricity grid,
rights to the area surrounding the original Hebei Hua
full connectivity to fixed and mobile telecommunications
Ao licence area and any other areas of interest in Hebei
systems and broadband access for internet services. It is
Province. Griffin, through its wholly owned UK subsidiary
63 kilometres from Chongli, the location of the outdoor
Panda Resources Limited (“Panda”), has a 90% interest
events of the 2022 Winter Olympic and Paralympic
in Hebei Anglo whilst Yuanrun holds 10%. As Griffin
Games, connected via a high speed train link with Beijing.
investigates other areas of interest and projects in China,
Climatic conditions are relatively mild with warm summers
and very cold, snowy winters, enabling the Caijiaying Mine
The Caijiaying Mine was commissioned on time and on
Hebei Anglo may be used to invest in any such projects.
to operate throughout the year.
DEVELOPMENT
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. Mining rates solely from Zone
Hebei Hua Ao is a contractual co-operative joint venture
III have recently reached the equivalent of 1.5 million
company established in 1994 under PRC law. Initially,
tonnes of ore per annum. The development of Zone II at
Griffin held 60% of Hebei Hua Ao (through its wholly
the Caijiaying Mine, now being undertaken, will enable
owned subsidiary China Zinc) with the remaining 40%
current and possibly higher production rates in the future.
held by Yuanrun, the shareholders of which are the
Zhangjiakou City People’s Government and the Third
Geological Brigade of Hebei Province (the “Third
Brigade”).
To date Griffin has invested over $380 million on
acquiring its interest in the Caijiaying Mine and in the
development and construction of the workings and
processing facilities financed mainly from internally
The initial operating term of Hebei Hua Ao was 25 years
generated funds.
With the grant of a new mining licence in December
2020 over the combined Zone II and Zone III areas,
application was subsequently made for the approval of a
mine design for the new Zone II area. This was granted
in March 2023 and has enabled development at Zone II to
commence. This will allow sustained production of at least
1.5 million tonnes of ore per annum to be extracted from
the Caijiaying Mine until 2050, if not longer.
and was due to expire in 2019. In light of the continuing
increase in the resources base and production profile of
the Caijiaying Mine, the Company, through China Zinc,
purchased an additional 28.8% interest in Hebei Hua
Ao from Yuanrun in 2012. Griffin now holds an 88.8%
equity interest in Hebei Hua Ao and Yuanrun retains an
11.2% residual interest compensated via a service contract
for accounting purposes for services rendered, resulting
in Hebei Hua Ao being in the nature of a wholly owned
subsidiary of the Company. In addition, and as part of this
purchase agreement, the term of the Hebei Hua Ao joint
venture was extended to October 2037.
On 1 January 2020 a new PRC Foreign Investment Law
was enabled which repealed the Sino Foreign Joint Venture
Law. Pursuant to Article 42 all Joint Ventures established
under the previous law must be converted into limited
liability companies by 1 January 2025. This will require,
inter alia, the adoption of new Articles of Association which
7
RepoRt and accounts 2022 Caijiaying (continued)
MINERAL RESOURCE ESTIMATES
Caijiaying Zone III Remaining Mineral Resources
Zone III Domain 1: Zn Resources > 1% Zn
Zn
(%)
4.5
4.0
3.5
4.1
Pb
(%)
0.2
0.2
0.2
0.2
Ag
(g/t)
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
23
18
22
21
0.6
0.5
0.4
0.5
833
528
495
1,856
42
22
28
92
13,511
7,493
9,978
30,982
363
211
173
747
Zone III Domain 2: Au Resources > 0.5 g/t Au
Zn
(%)
0.8
0.8
Zn
(%)
4.5
4.0
3.4
4.0
Zn
(%)
2.9
2.5
2.7
Zn
(%)
3.8
3.7
3.7
Zn
(%)
3.7
3.6
3.7
Pb
(%)
0.1
0.1
Pb
(%)
0.2
0.2
0.2
0.2
Ag
(g/t)
19
19
Au
(g/t)
2.8
2.8
Zone III: Total
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
5
5
1
1
386
386
57
57
Ag
(g/t)
23
18
22
21.1
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
0.6
0.5
0.5
0.5
833
528
500
1,861
42
22
29
92
13,511
7,493
10,364
31,368
363
211
230
804
Caijiaying Zone II Mineral Resources
Zone II Oxide: Zn Resources > 1% Zn
Pb
(%)
0.5
0.5
0.5
Ag
(g/t)
19
17
18
Au
(g/t)
0.3
0.1
0.2
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
35
39
74
6
8
14
751
830
1,581
11
7
17
Zone II Fresh: Zn Resources > 1% Zn
Pb
(%)
0.9
1
1
Pb
(%)
0.9
1
0.9
Ag
(g/t)
27
30
29
Au
(g/t)
0.3
0.4
0.4
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
436
977
1,413
109
253
362
10,085
25,108
35,193
96
350
446
Zone II Total
Ag
(g/t)
27
29
28
Au
(g/t)
0.3
0.4
0.4
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
471
1,015
1,486
115
261
376
10,836
25,938
36,774
107
356
463
Tonnes
(Mt)
18.6
13.1
14.1
45.7
Tonnes
(Mt)
0.6
0.6
Tonnes
(Mt)
18.6
13.1
14.7
46.3
Tonnes
(Mt)
1.2
1.6
2.8
Tonnes
(Mt)
11.5
26.4
37.9
Tonnes
(Mt)
12.7
27.9
40.7
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
8
Griffin MininG LiMited
Caijiaying Zone V Mineral Resources
Zone V Zn Resources > 1% Zn
Category
Inferred
Total
Tonnes
(Mt)
6
6
Zn
(%)
3.2
3.2
Pb
(%)
1.4
1.4
Ag
(g/t)
56
56
Au
(g/t)
0.6
0.6
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
191
191
84
84
10,819
10,819
116
116
Caijiaying Zone VIII Mineral Resources
Zone VIII Domain 1: Zn Resources > 1% Zn
Category
Inferred
Total
Category
Inferred
Total
Category
Inferred
Total
Tonnes
(Mt)
6.1
6.1
Zn
(%)
4.4
4.4
Pb
(%)
0.7
0.7
Ag
(g/t)
36
36
Au
(g/t)
0.5
0.5
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
272
272
41
41
7,112
7,112
106
106
Zone VIII Domain 2: Au Resources > 0.5 g/t Au
Tonnes
(Mt)
0.7
0.7
Zn
(%)
0.7
0.7
Pb
(%)
0.7
0.7
Ag
(g/t)
45
45
Au
(g/t)
2.4
2.4
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
5
5
5
5
1,012
1,012
54
54
Zone VIII Total
Tonnes
(Mt)
Zn
(%)
Pb
(%)
Ag
(g/t)
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
6.8
6.8
4
4
0.7
0.7
37
37
0.7
0.7
277
277
46
46
8,124
8,124
160
160
Caijiaying Combined Global Mineral Resources February 2022
Category
Measured
Indicated
Inferred
Total
Tonnes
(Mt)
18.6
25.8
55.4
99.7
Zn
(%)
4.5
3.9
3.6
3.8
Pb
(%)
0.2
0.5
0.8
0.6
Ag
(g/t)
23
22
31
27.2
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
0.6
0.4
0.5
0.5
833
999
1,983
3,815
42
137
420
598
13,511
18,329
55,245
87,085
363
318
862
1,543
Notes:
The Caijiaying Mineral Resources are based on resource modelling work completed by CSA Global Pty Ltd and reported in 2022 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 Dr. Maxim Seredkin a Competent Person, who is a Member of the Australian Institute of Geoscientists. Dr. Maxim Seredkin is a full-time
employee of CSA Global Pty Ltd. Dr. Maxim Seredkin 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). Dr. Maxim Seredkin 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.
9
RepoRt and accounts 2022
Caijiaying (continued)
MINERAL RESOURCE ESTIMATES
Zone II
The Caijiaying Mine’s Global Mineral Resource estimate
comprises Zones II, III, V and VIII at a zinc cut-off grade
of 1% as, amended for mining depletion at Zone III at
31 December 2022. In summary, the Global Measured,
Indicated and Inferred Mineral Resource estimate totals
99.7 million tonnes at 3.8% Zn, 0.6% Pb, 27.2g/t Ag
and 0.5g/t Au, resulting in total contained metal of
approximately 3.82 million tonnes of zinc, 0.6 million
tonnes of lead, 87.1 million ounces of silver and 1.54
million ounces of gold.
Zone III, which has been the primary source of ore since
the Caijiaying Mine was commissioned in 2005, continues
underground production down to the 1000RL (1,000
metres above mean sea level) mining licence boundary. In
2022 a total of 199 underground diamond drill holes were
completed at Zones III and II for a total of 28,696 metres
utilising 4 to 5 underground electric-hydraulic diamond
drill rigs. Zones V and VIII are located within a Retention
Licence that covers an area of 2.23 square kilometres and is
valid until 16 July 2024. Applications for the conversion of
the Retention Licence to a Mining Licence are in progress.
Zone III
The Mineral Resource estimate at Zone III has been
amended for mining depletion up to 31 December 2022.
The 2022 depleted Measured, Indicated and Inferred Zone
III Mineral Resource estimate totals 46.3 million tonnes at
4.0% Zn, 0.2% Pb, 21.1g/t Ag and 0.5g/t Au, resulting in
total contained metal of approximately 1.9 million tonnes of
zinc, 0.1 million tonnes of lead, 31.4 million ounces of silver
and 0.80 million ounces of gold. Underground diamond
drilling has focused on grade control and resource definition
drilling within the Zone III main mine corridor.
The Zone III Mineral Resource estimate is defined by a total
of 189 surface diamond drillholes, 32 reverse circulation
surface drillholes and 4,603 underground diamond
drillholes with an average spacing of approximately 40
metres x 40 metres, for a combined total of 607,959 metres
of drilling.
Underground
resource definition diamond drilling
continued in Zone II throughout 2022 with periodic
disruptions due to government
imposed operational
shutdowns and Covid-19 related
impediments. The
Indicated and Inferred Zone II Mineral Resource estimate
first reported in January 2021 remains unchanged at 40.7
million tonnes at 3.7% Zn, 0.9% Pb, 28.0g/t Ag and 0.4g/t
Au, resulting in total contained 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.
This estimate was based on a total of 109 surface diamond
drillholes, 91 reverse circulation surface drillholes and 163
underground diamond drillholes, to define the Zone II
deposit at an average spacing of approximately 40 metres x
40 metres for a combined total of 91,383 metres of drilling.
An additional 70 underground diamond drill holes for a
total of 16,126 metres were completed for Zone II in 2022.
Zone V
According to the conditions set forth in the Retention
Licence, renewed in July 2022, there have been no on ground
activities at Zones V and Zone VIII in 2022. As this phase
of the licencing procedure involves pursuing administrative
applications for a mining licence, the mineral resource at
these sites remains unchanged. At Zone V the Inferred
Mineral Resource Estimate totals 6.0 million tonnes at
3.2% Zn, 1.4% Pb, 56.0g/t Ag and 0.6g/t Au resulting in
total contained 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. A total of 34 surface
diamond drillholes, 3 reverse circulation surface drillholes
with an average spacing of approximately 25 metres x 100
metres define the Zone V deposit for a combined total of
15,242 metres of historical drilling.
Zone VIII
The Inferred Mineral Resource estimate at Zone VIII totals
6.8 million tonnes at 4.0% Zn, 0.7% Pb, 37.0g/t Ag and
0.7g/t Au resulting in total contained metal of approximately
0.3 million tonnes of zinc, 0.05 million tonnes of lead, 8.1
million ounces of silver and 0.16 million ounces of gold. A
total of 44 diamond drillholes with a spacing of 50 metres
x 100 metres define the Zone VIII deposit for a combined
total of 32,193 metres drilled.
10
Griffin MininG LiMited GEOLOGY
Regional Exploration
The Caijiaying Mine is located at the northern margin
of the North China Craton in the Yanshan Metallogenic
Belt within Hebei Province of the PRC. This prolific
metallogenic belt trends east-west for hundreds of
kilometres and contains numerous
large mineral
deposits of various types making the Yanshan one of
the most economic regions in northern China. The
local geology at the Caijiaying Mine comprises of 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. Mineralisation is believed to be related to a
Jurassic igneous event that altered the 2.3 billion-year-old
metamorphic basement rocks.
The successful production and mine expansion at the
Caijiaying Mine continues to be the core focus. While
there has been no regional exploration activities the
Company continues to research and assess appropriate
project opportunities.
Proposed 2023 Exploration
Technical structural lithogeochemical studies have been
a significant component to the successful increase in
production at Zone III over many years. These research
studies continued in 2023 with a focus on advanced
geochemical and structural modelling techniques being
applied to Zone II.
Underground exploration drilling activities for 2023 are
set to increase and are summarised into the following
The Caijiaying Mine hosts base metal and gold
categories:
mineralisation consistent with that of a replacement skarn
type deposit. Lithologies comprise a mixed sequence of
amphibolite-grade metavolcanic and metasedimentary
rocks intruded by three generations of Jurassic porphyry
dikes and sills that crosscut the mineralisation. The
• Zone II resource definition and exploration drilling of
Induce Polarization (IP) geophysical anomalies east of
the main line of lodes;
• Zone II exploratory drilling west of the main line of
mineralisation commonly occurs as sulphide lenses of
lodes;
• Zone III deep exploratory drilling below the 1000RL;
and
• Regional project evaluations including administrative
report compilations and tenure applications to the
relevant PRC Government agencies.
sphalerite with lesser pyrite and minor galena that favourably
replace calc silicate and iron enriched amphibolite units
within the folded metamorphic volcanic basement rocks.
The Caijiaying Mine orebodies of Zn-Au-Ag-Pb are up to
20 m thick, tend to dip steeply to moderately to the west,
and extend along strike and down dip tens to hundreds
of metres. Overall, the geology at the Caijiaying Mine is
complex and the deposit is the result of a combination of
volcanic activity, structural deformation and hydrothermal
alteration.
EXPLORATION
Hebei Hua Ao Mining Area
Significant progress has been made at the Caijiaying
Mine with the prioritization of underground diamond
drilling towards grade control and near mine resource
definition targets at Zones III and II. Numerous technical
geological studies completed over the past years continue
to provide practical exploration-based outcomes. In 2022
the exploration activity has been dominated by desktop
data analysis and exploration target generation that is
set to expand existing areas of mineralisation and unlock
exploration potential in the Hebei Hua Ao Mining area.
11
RepoRt and accounts 2022 12
Plan view of Zones II, III, V & VIII with surrounding licence areas
Griffin MininG LiMited 13
RepoRt and accounts 2022 14
Griffin MininG LiMited Long section view orientated west of the Zone III Mineral Resource wireframes (red)
and underground development and stoping (blue)
15
RepoRt and accounts 2022 Caijiaying (continued)
OPERATIONS
Production at the Caijiaying Mine in 2022 and 2021 may be summarised as follows:
Year to
31 December 2022
Year to
31 December 2021
Ore mined
Ore processed
Zinc in concentrate Produced
Gold in concentrate produced
Silver in concentrate produced
Tonnes
Tonnes
Tonnes
Ozs
Ozs
Lead in concentrate produced
Tonnes
852,579
831,549
31,787
10,137
224,587
940
971,492
985,404
41,587
14,447
269,570
1,069
First quarter 2022 results were impacted by the enforced
and zero hospitalisations. Deployment of onsite Covid-19
suspension of all operations at the Caijiaying Mine for the
care facilities supported by local government agencies
Chinese Lunar New Year holiday celebrations, the Winter
ensured that the effect of Covid-19 on personnel has been
Olympics and the subsequent Winter Paralympics. Mining
minimised enabling operations to continue unabated.
recommenced on the 23 March 2022 and processing on
the 25 March 2022. Operations were again suspended due
to the relevant Chinese authorities restricting the supply
and use of explosives for the duration of the Chinese
Communist National Party Congress from 22 September
2022 to 17 November 2022.
2022 was one of the most disrupted and challenging years in
the history of the Group with ongoing Covid-19 pandemic
issues and 143 days of lost production due to restrictions
imposed by the PRC authorities during the Winter and
Paralympic Olympics and the Chinese Communist Party
20th National Congress.
Despite these extreme challenges the persistence and
resilience of the operational team delivered all required
objectives to achieve an annualised 1.5 million tonnes of
ore per annum production capability by the conclusion
of 2022 with a record 136,000 tonnes of ore processed in
December 2022.
Covid-19 remained an ever-present challenge throughout
2022 with multiple lock downs and travel restrictions
persisting right up until the major outbreak of Covid-19 in
China at the conclusion of 2022.
Thanks to the Covid-19 risk management process
implemented by Hebei Hua Ao with local PRC government
agencies, there was minimal disruption to operations at
the Caijiaying Mine with all employees being vaccinated
The operational improvements to reach the capability of
processing 1.5 million tonnes of ore per annum was the
result of a culmination of a three-year mine capability
project to improve mine safety, planning, mechanisation,
and automation, including modernisation of contractor
equipment and skills.
Sustained improvements throughout 2022 continued with
a fully modernised fleet of trucks, Jumbos and production
drills supported by optimised paste back fill systems
resulting in a record 150,000 tonnes of ore blasted and
138,000 tonnes of ore hauled in December 2022.
The commercial benefits of higher production and sound
cost management were realised financially in 2022 despite
143 days without production.
Mine safety improvements have been critical to supporting
the push for higher production with the implementation
of digital reporting systems and culturally appropriate
safe production bonuses further aligning all workers and
contractors to the Company operating objectives with safe
production.
Sustainable safe performance is the foundation of the
Company’s commitment to our employees, contractors
and stakeholders and developing a unique, beneficial
relationship with all the communities, including the 80%
of all employees who reside locally.
16
Griffin MininG LiMited
Griffin, through Hebei Hua Ao, seeks to support the
the first uninterrupted year of production since the isolation
local rural community by providing access to advanced
of China due to Covid-19 in early 2020.
training, education through scholarships, community
support programs and stable employment with the benefit
of giving Hebei Hua Ao ongoing access to employees of
the requisite calibre.
In 2023 the mine will enter its next phase of growth by
seeking to progress approvals for mining in Zone V and
Zone VIII and the expansion of operations below the
1000RL for ongoing sustained production out to 2050 at
Sustainable production for the foreseeable future is secure.
equivalent or higher production rates.
Zone III, above the 1000RL, has all infrastructure and ore
access fully developed providing access to over 6 million
tonnes of ore. The focus of development now rests on
Zone II which has a current mine life of over 20 years.
Following the grant of the new mining licence to include
Zone II, all technical design specifications for the mine
design of Zone II were submitted by 17 December 2022
with final PRC approval received in March 2023.
Diamond drilling with 3 rigs commenced in Zone II in 2022
with the recommencement of operations after the Chinese
Communist Party National Congress in March 2022.
The Zone II diamond drilling program is focused on the
conversion of inferred and indicated resources to proven
status ahead of production and drilling will increase with 5
rigs in 2023 as development expands the drilling horizons.
Zone III diamond drilling comprising of 2 rigs will focus
on expanding the 6 million tonnes of accessible ore and
extending the life of mine significantly.
To support future growth strategies and sustained
production the construction of a new tailing’s storage
facility (“TSF4”) was successfully achieved in November
2022. TSF4 will utilise the existing dry stack system with
industry leading safety techniques eliminating water
containment and thereby preventing dam failures.
The dry stack method of tailings storage is environmentally
and socially responsible with tailings upcycled into bricks
and reclaimable to its original condition as grazing land at
the end of its service life.
In 2022, Griffin committed to supporting renewable energy
providing access to land on the closed tailings facilities 1
and 2 for a 6 megawatt solar farm and committing to local
wind power projects as a consumer.
2023 will see further optimisation benefits of the 1.5 million
tonne per annum growth strategy in what is expected to be
17
RepoRt and accounts 2022 18
Griffin MininG LiMited Mill showing Primary Ball Mill in the background and two Secondary Ball Mills in the foreground.
19
RepoRt and accounts 2022 sustainability, environment and loCal Community
SUSTAINABLILITY REVIEW
The directors and management are focused on ensuring
the health and safety and development of employees,
the
long-term sustainability of the Company and
its
conducting business with
integrity
throughout
the
business to benefit its shareholders and other stakeholders.
Group and supply chain as well as actively engaging
Sustainability is supported by the Group’s values; operating
and contributing to the local community around the
in an environmentally responsible manner by continually
Caijiaying Mine.
improving circular and low-carbon operations, prioritising
Key Goals
Actions
Corresponding Chapters
Griffin invests in community and public welfare activities, fulfilling its
corporate social responsibility.
Engagement with local
communities (page 33)
Griffin cares for the physical safety and mental health of employees,
carries out occupational disease prevention work and provides
comprehensive social security, salary and welfare for employees.
Development of Employees (page
25)
Griffin promotes the concept of water-saving, advocating employees
to save water, strengthens water control at business sites and eliminates
waste to build a water-saving society.
Adhering to Green Development
and Heading for a Zero-carbon
Future (page 21)
Griffin encourages the development of talent amongst its employees
to create an inclusive and harmonious working environment for the
benefit of the business and employees.
Development of Employees (page
28)
Griffin prohibits the use of child labour and forced labour, adheres
to the principle of equal employment, has established fair promotion
mechanisms, abides by relevant laws and regulations related to human
rights, and provides equal opportunities to all employees.
Griffin seeks to ensure safe production, “green” purchases and
environment conservation, developing a circular economy, and
fulfilling social obligations together with suppliers and business
partners.
Whilst there was no significant impact on operations from climate
change in 2022, Griffin actively considers and responds to climate
change issues, advancing green and low-carbon strategies, improving
resource efficiency, and leads the industry in China in transforming
to a low-carbon economy.
Griffin seeks to ensure no wastewater is discharged into the local
environment with water conservation initiatives, including the
recycling of all production wastewater, resulting in the treatment and
utilisation of 100% of mining wastewater.
Development of Employees (page
29)
Reinforcing Health and Safety
Management (page 25)
Building a Sustainable Supply
Chain (page 30)
Enhancing Quality Management
and Protecting the Rights and
Interests of Customers (page 32)
Adhering to Green Development
and Heading for a Zero-carbon
Future (page 21)
Adhering to Green Development
and Heading for a Zero-carbon
Future (page 21)
Griffin maintains the highest standards of business ethics, continuously
improving transparent compliance supervision and reporting systems,
to ensure zero tolerance for corruption and any illegal acts.
Strengthening Risk Management
and Regulating Business Ethics
(page 33)
20
Griffin MininG LiMited GREEN DEVELOPMENT AND HEADING
FOR A ZERO-CARBON FUTURE
Griffin fully understands that transitioning to a low-carbon
economy is a major global challenge. As a responsible
enterprise, Griffin strictly abides by the Environmental
Protection Law of the People’s Republic of China, the
Environmental Impact Assessment Law of the People’s Republic
of China, the Cleaner Production Promotion Law of the People’s
Republic of China and other relevant laws and regulations.
Griffin
implements a
low-carbon strategy, actively
promoting the construction of a green mine, studies and
applies resource-saving technologies, improves resource
utilisation efficiency and implements energy-saving and
emission-reduction measures. Griffin aims to reduce any
negative impact of its operations on the environment and
to ensure that environmental protection is planned and
implemented in conjunction with the mine’s operations.
Green Mining Construction
Protection and Treatment Fund” to assist in the completion
of field renovation, tailings pond reclamation, road
hardening, and covering of temporary dumps aiming to
achieve 100% greening of the land exposed in the mining
area and the goal of “As Green as Possible”.
Responding to Climate Change
Climate change related risks from extreme weather such
as heavy rain, snowstorms, floods, typhoons, and sudden
natural disasters could disrupt operations, cause closure of
the mine and accidents, with consequent economic loss and
harm to employees.
Griffin strictly abides by the Guidelines on Strengthening
Response to Heavy Pollution Weather and Consolidating
Emergency Emission Reduction Measures issued by the PRC
Ministry of Ecology and Environment and has formulated
response plans to climate change related risks. When
severe weather occurs, the production plan will be adjusted
promptly; production will be shutdown, ore crushing and
The Caijiaying Mine is designated as one of the PRC’s
screening, lead flotation, zinc flotation, concentration,
national green mines. Griffin actively implements the
filtration, tailings conveying and other processes will be
PRC’s policy of “developing green mining and building
stopped. Vehicle transportation activities are minimised to
green mines”, adheres to the policy of “developing while
avoid dust pollution.
protecting and protecting while developing”, fully promotes
the construction of a green mine, ensures environmental
Environmental Emergency Response Plan
In accordance with the requirements of the PRC Interim
Measures for the Management of Emergency Response Plan for
Environmental Incidents documents such as the Emergency
Response Plan
for Environmental Pollution Incident
in
Caijiaying Zinc and Gold Mine of Hebei Hua’ Ao Mining
Development Company Limited and Operation Plan for
Emergency Response in Heavy Pollution Weather have been
drawn up. A special emergency response leadership group
regularly conducts environmental risk assessments and, in
the event of an incident, takes the necessary measures to
complete any rescue safely and efficiently and reduce the
extent of environmental pollution and ecological damage.
In addition, Griffin regularly provides training and
organises emergency drills to raise the environmental
awareness of employees.
protection in the whole life cycle of mining development,
such as mine exploration, mining, beneficiation and closure
and seeks to integrate mine production and construction
with ecological protection.
A Mine Geological Environmental Protection System
has been established and the green mine construction
team is headed by the Caijiaying Operations Manager.
During 2022 Griffin practised sustainable development
and consolidated the achievements of its green mine
construction by increasing investment in scientific research,
regulating emissions, greening and treating mining areas
and establishing local cooperation relationships.
Geological environmental damage within the mine area
has been managed by restoring the ecological environment
around the mining area and establishing geohazard
and
environmental monitoring
systems. Potential
geohazard inspections are regularly conducted to reduce
environmental risks as much as possible.
Griffin continued to work according to the Green Mine
Construction Plan, and has invested 5%-10% of the total
enterprise output value in the “Mine Environmental
21
RepoRt and accounts 2022 22
Griffin MininG LiMited Tailings Facility Four with Tailings Facility Three in the background
23
RepoRt and accounts 2022 sustainability, environment and loCal Community (continued)
Key Environmental Performance Indicators - Emissions:
Total GHG emissions (Scope 1 and Scope 2) (tonnes)
45,044.79
42,644.31
2022
2021
Direct GHG emissions (Scope 1) (tonnes) including:
Diesel
Coal
Indirect GHG emissions (Scope 2) (tonnes) including:
Purchased electricity
NOx (tonnes)
SO2 (tonnes)
Dust (tonnes)
Wastewater discharge (10,000 tonnes)
Wastewater discharge intensity (tonnes/RMB million)
Hazardous waste (tonnes)
General solid waste generation (10,000 tons)
Notes:
925.61
7,812.28
1,166.88
n/a
36,306.90
41,477.43
2.21
0.90
0.19
0
0
35.43
79.12
n/a
n/a
n/a
0
0
47.60
68.93
• The greenhouse gas (GHG) inventory includes carbon dioxide, methane, and nitrous oxide. GHG emissions are presented in carbon
dioxide equivalents and calculated based on the electricity emission factor in the 2019 Baseline Emission Factors for Regional Power
Grids in China issued by the Ministry of Ecology and Environment of the People’s Republic of China and the 2006 IPCC Guidelines
for National Greenhouse Gas Inventories (2019 Revision) issued by the Intergovernmental Panel on Climate Change (IPCC). Scope
1 GHG covers GHG emissions directly generated from the businesses owned or controlled by the Company; Scope 2 GHG covers
“indirect energy” GHG emissions from the Company’s internal consumption (purchased or obtained).
• Nitrogen oxides, sulphur dioxide and dust mainly emanate from heating boilers
• During the reporting period, the new low-emission coal-fired boiler has been put into use, so the total waste gas emissions, total GHG
emissions, and the energy consumption data increased compared with the previous year.
Key Environmental Performance Indicators - Energy and Resources Consumption:
2022
2021
Total energy consumption (MWh)
75,308.123
58,263.004
Direct energy consumption (MWh) Including:
Diesel
Coal
Indirect energy consumption (MWh) Including: Purchased electricity
Total water consumption (10,000 tonnes)
0.003
24,308.12
51,000.00
38.56
0.004
n/a
58,263.00
40.90
Notes:
• Total energy consumption is calculated based on direct and indirect energy consumption according to the conversion factors listed in the
National Standards of the People’s Republic of China General Principles for Calculation of the Comprehensive Energy Consumption
(GB/T 2589-2020).
• The Group’s business does not involve the use of packaging materials and data disclosure.
24
Griffin MininG LiMited
REINFORCING HEALTH AND SAFETY
MANAGEMENT
The health and safety of employees are a priority of the
Group as is adherence to the PRC’s “Safety and Prevention
First, Comprehensive Governance” safety policy and
continual improvements to its safety management systems.
According to the Law of the People’s Republic of China on
Work Safety, Safety in Mines and other laws and regulations,
Griffin has revised its Safety Production Responsibility System,
inspections in areas such as ore processing, mining
workshops, bases and warehouses and organised and
completed professional special safety inspections nearly 50
times. Griffin completed the rectification of all the hidden
dangers found in the safety inspections in 2022. In 2022,
there were no work-related fatalities and the days lost to
work injury continued to decline.
Health and Safety of Employees
Safety Production Rules and Regulations, Operating Procedures
Indicators
2022
2021
2020
and other system documents with which all employees are
required to comply. Griffin has strengthened production
safety management as well as inculcating a culture of safety.
During 2022, Griffin established a Safety Management
Committee comprising the Chief Operating Officer, the
Operations Manager and Chief Safety Manager and the
heads of all departments. Griffin has set up a well-resourced
Total number of
work-related fatalities
Lost days due to
work injury
0
0
0
86
180
570
Emergency Plan For Accidents
safety department specifically responsible for production
To implement its safety management policy, Griffin
safety management and established a “Safety Production
has continuously
improved work health and safety
Responsibility System” and “Double Prevention System
guidelines and formulated; Emergency Plan for Production
for Safety Production” so that all employees are crystal
Safety Accidents and Special Emergency Plan for Tailings
clear about their safety responsibilities
At the beginning of 2022, the Company formulated the
Annual Work Safety Plan, which specified the following
objectives:
• No work-related fatalities or serious injuries;
• 3% reduction in minor injuries;
• 100% safety training rate;
Dam; Underground and Processing Plant; and other system
documents according to the requirements of relevant laws
and regulations and the Workplace Accident Emergency Plan
Management Measures and the Guidelines for Work and Business
Units Work Safety Accident Emergency Plan Preparation (GB/T
29639-2020). Griffin seeks to strengthen the identification of
safety risks, reinforcing accident emergency management by
displaying posters and slogans, educating employees on safety
and conducting fire drills.
• “Three positions” personnel
(the main person
At the Caijiaying Mine a “six systems for underground
in charge, safety management personnel, special
safety” has been set up, encompassing an underground
operators) with a certificate on duty rate of 100%;
wireless intercom system and video monitoring system.
• Special equipment inspection pass rate of 100%.
Griffin values the development of the “production safety
system”, in doing so establishing and revising more than
90 production safety rules and regulations and more than
150 safety operating procedures to improve the production
safety management level. Griffin seeks to identify and
rectify any risks that may involve high-risk positions.
Employees at the Caijiaying Mine are required to conduct
a Job Safety Analysis before starting work to ensure that
safety hazard inspections are completed and potential risks
identified. In 2022, Griffin conducted 4 quarterly safety
inspections, more than 180 regular safety production
Management can thus monitor the underground working
environment,
location of personnel and equipment
working status and ensure that, in the event of underground
emergencies, personnel can be identified and quickly
evacuated. In addition, an emergency rescue team has been
formed to protect the lives of employees.
Safety Training And Emergency Drills
Regular safety education and training continued to be
improved during 2022 with an 18% increase in total safety
training hours. External production safety experts conduct
education and training for all employees and contractors.
Griffin also seeks to prepare all operating personnel for
25
RepoRt and accounts 2022 26
Griffin MininG LiMited The Caijiaying Mine with wind turbines in the background
27
RepoRt and accounts 2022 sustainability, environment and loCal Community (continued)
emergency situations through regular drills such as fire,
flood control in the tailings storage, sudden failure of
ventilation fans, power failure in the explosives storage and
down-hole backwind tests.
In 2022, the Company conducted safety training as follows:
Training Type
Number of Participants
(Person-time)
Annual safety training for all employees
Occupational health training
Emergency rescue team training
New employee’s safety induction
Other Safety training
427
336
779
152
2,620
Employment
Category
By gender
Male
Female
As of 31 December 2022
By management
Management personnel
level
By age
General personnel
Aged 30 and below
Aged 31 to 50
Aged 50 and above
By employment
Full-time
The total safety training hours in 2022 was 9,754 hours.
type
Contractor Safety Management
By region
Part-time
China
Overseas
Griffin has formulated a contractor safety management
and assessment system. Each contractor has a Work
Safety Management Agreement with Griffin which defines
the management responsibilities of both parties for
hazard screening, treatment, and control. Griffin reviews
Employee Turnover Rate
Category
As of 31 December 2022
the contractor’s “Non-Coal Mining Enterprise Safety
Employee turnover rate
Production Licence” and other relevant qualifications or
certificates, supervises the implementation of laws and
training, coordinates with the contractor’s management
and incorporates the contractor’s safety management into
the safety management system at the mine.
DEVELOPMENT OF EMPLOYEES
A diverse and inclusive corporate culture at Griffin which
focuses on the long-term development of employees,
harmonious and safe working environment underpins the
success of the Group.
Employee Management Policy
The development of a talented diversified workforce is
encouraged by ensuring employee rights and interests
are protected in accordance with all PRC labour laws.
By gender
Male
Female
By management
Management personnel
0.4%
General personnel
8.3%
level
By age
Aged 30 and below
Aged 31 to 50
Aged 50 and above
type
By region
Part-time
Domestic
Overseas
care of their physical and mental health and fostering a
By employment
Full-time
SALARY AND WELFARE MANAGEMENT
Education to promote diversity and recruitment through
Employees receive a competitive base salary and
a variety of channels will continue to ensure the most
allowances according to their job title, years of experience
talented employees are attracted and retained at Griffin.
and responsibilities, as well as additional rewards for
As of 31 December 2022, the Griffin Group had 461
outstanding performance, behaviour and attitude to
employees.
motivate and inspire them.
28
394
67
26
435
30
271
160
461
0
454
7
8.8%
7.9%
0.9%
0.4%
3.9%
4.4%
8.8%
0%
8.5%
1.9%
Griffin MininG LiMited
Griffin monitors the welfare of employees to ensure all
STAFF DEVELOPMENT AND TRAINING
legal entitlements to holidays and other leave are taken.
To help create a harmonious workplace environment,
Griffin regularly organises holiday dinners, departmental
reunions and other activities and has set up activity rooms,
gymnasiums and other venues for employees to rest and
interact with each other to enhance their cohesion and
sense of belonging.
HUMAN RIGHTS PROTECTION POLICY
A comprehensive human rights protection policy is in place
to respect and protect human rights and establish legal and
stable labour relations with employees. In addition, Griffin
provides employees with training on human rights and
Employees are the key resource for the Group. Griffin
develops annual training plans in collaboration with
employees, designing diversified
training
courses,
providing induction training, on the job training and
continuing education and training to optimise the potential
of employees.
In 2022, the training coverage rate at Caijiaying reached
100%, with a total of 17,160 hours spent on various training
programmes. 457 employees participated in training and
the average training time per employee was 38 hours.
Various types of training were provided at Caijiaying as
follows:
makes every effort to promote the protection of human
• Management personnel
training: 26 management
rights. In 2022, there were no major labour disputes or
personnel received safe production and management
human rights complaints from employees.
development training;
Griffin complies with the PRC national working hours
• Special operation training: 41 operators received training
system, setting reasonable workloads for employees,
to obtain special equipment operation certificates;
continuously optimising the working hours management
policy, encouraging employees to work efficiently during
normal working hours and take their full entitlement to
holidays. Griffin operates on a working system of 8 hours
a day and an average working week of no more than 40
hours. Any arrangement requiring a variation to these
hours will only be implemented after obtaining the consent
• Special equipment training: 9 operators and management
personnel received special equipment management
and operation training;
• New employees training: 54 new employees received
three-tier training; and
of the employees and relevant responsible departments.
• Safety Training: All employees received internal safety
If employees need to work overtime or exceed normal
training.
working hours, Griffin will pay overtime or arrange rest
periods in accordance with the relevant national and
Occupational Health
Company regulations.
Griffin strives to create a safe and harmonious work
environment, strictly prohibiting the employment or
use of child labour, opposes any form of forced labour
and requires suppliers and vendors to implement the
same employment standards. Griffin strictly enforces the
national minimum working age regulations and verifies the
identity and age of candidates at the time of recruitment.
Employees are encouraged
to participate
in
the
democratic management of the Company, elect employee
representatives and hold regular employee representative
meetings. The right of employees to participate in
labour unions is respected. A transparent employee
communication mechanism has been established including
employee suggestion boxes to encourage contributions to
the development of the Group.
In accordance with the overriding “Life First” safety
concept, Griffin works to prevent occupational diseases,
strives to prevent, control and eliminate occupational
hazards in the workplace, provides employees with sound
occupational health protection equipment and facilities
and improves the production and working environment
for employees. Qualified third parties have formulated the
Implementation Plan for the Identification and Rectification
of Occupational Hazards for the Company. Regular testing
of occupational hazard factors is carried out to identify
and minimise the severity of occupational disease hazards.
Effective preventive measures are taken in response to the
findings. In 2022, Griffin formulated the Annual Work Plan
for Safety Production, specifying the target of “0 incidences of
occupational diseases among employees”.
29
RepoRt and accounts 2022 sustainability, environment and loCal Community (continued)
Social medical
insurance and supplemental medical
insurance are provided for employees. Pre-employment,
on-the-job and post-employment health checkups for
occupational hazards are undertaken at the Caijiaying
Mine,
so
that occupational diseases, occupational
contraindications and other abnormal conditions are
detected as early as possible.
BUILDING A SUSTAINABLE SUPPLY
CHAIN
Griffin commits to working with suppliers to create
a mutually beneficial
relationship
as
responsible
procurement is essential for Griffin to achieve sustainable
development. Accordingly, Griffin seeks to continuously
improve supplier management systems and procurement
Griffin equips workers at the Caijiaying Mine with earplugs
processes in accordance with established company policies.
and other protection
including personal protective
equipment, in addition to striving to reduce the incidence
of occupational hazard accidents and occupational
diseases, by providing related training to improve safety
management and awareness.
Throughout the Covid-19 pandemic Griffin implemented
the PRC national and
local epidemic prevention
requirements, instigating regular management policies in
response to the epidemic, carried out comprehensive and
regular disinfection of the office environment and sourced
sufficient protective equipment and medicines for the
health and safety of employees. In addition, close attention
was paid to the mental health of employees and they were
provided with psychological counselling when necessary.
Griffin regularly evaluates and assesses suppliers to
ensure they are fulfilling their environmental and social
responsibilities.
Supplier Access And Daily Management
Griffin strives to build a transparent and honest supply
chain and has established a strict and standardised supplier
access process and evaluation system.
Suppliers are assessed against a strict set of criteria. At
the Caijiaying Mine, a Supplier Basic Information Form,
is used to select suitable suppliers according to criteria
including environmental protection, safety management,
Occupational Health and Safety Training
30
Griffin MininG LiMited technology application and priority is given to suppliers
For example, when selecting dust removal equipment,
with professional qualification certificates for quality
boiler desulphurisation and denitration equipment,
management, environmental management, occupational
minerals,
geomorphous
fabrics,
electromagnetic
health and safety management and other special product
flowmeters and other materials, suppliers with professional
safety marks. Griffin also evaluates the reasonableness of
qualification certification such as the quality management,
suppliers’ product prices through multiple quotations and
environmental management, and occupational health and
price comparisons. To ensure that product quality meets
safety management of electric water boilers were chosen.
Griffin’s requirements, product samples are collected
Heavy diesel and gas vehicles should meet the emission
from suppliers, and where appropriate sent to third-
standards of the National V Emission Standard. In addition,
party independent institutions for testing and analysis,
priority is given to suppliers with short transportation
following which the results are evaluated to select the most
distances to reduce logistics costs and environmental
appropriate supplier.
pollution during transportation, and further promote
Annual evaluations are carried out on qualified suppliers
sustainable development.
to ensure standards are being maintained by carrying
At Caijiaying Griffin requires suppliers to sign the Legal
out onsite inspections, testing product quality, assessing
Employment Commitment to reduce the risk of illegal
production, delivery and transportation capacities. Any
employment, requires suppliers to comply with relevant
suppliers who have not maintained their standards or who
laws and regulations, pay labour compensation on time,
have negatively impacted on the environment are required
resolutely prevents the occurrence of child labour and
to undertake timely rectification. Griffin will terminate
violations of human rights of employees and safeguards the
the supply of goods and services from those suppliers who
legitimate rights and interests of suppliers and employees.
continue to fail to meet Griffin’s requirements, do not
deliver on time and cannot provide high quality after-sales
service.
Griffin provides training to its procurement employees,
actively communicates with suppliers in the course of
daily procurement work, encourages suppliers to use
environmentally friendly products or services and has
developed corresponding implementation and monitoring
methods. Griffin will cancel cooperation with suppliers
who do not accept Griffin’s sustainability concepts.
ENVIRONMENTAL AND SOCIAL RISKS
MANAGEMENT
Griffin is committed to growing with its suppliers,
reassessing
their environmental,
safety and
social
responsibility risks at the beginning of each year and
improving environmental and social risk management in
tandem with them. Griffin requires suppliers to conduct
environmental and health management when entering
into procurement contracts for equipment, building
As of 31 December 2022, the Company had 309 suppliers
in total in Mainland China.
ENHANCING QUALITY MANAGEMENT
AND PROTECTING THE RIGHTS AND
INTERESTS OF CUSTOMERS
Griffin continually optimises
its product quality
management system and the process configuration to
produce high-quality lead, gold, silver and zinc concentrate
products that meet customers’ needs through strict
management of mining and processing.
To ensure the stability of product quality, Griffin strictly
abides by the Product Quality Law of the People’s Republic
of China and other laws and regulations, has formulated
product quality standards and requirements for daily
management and regularly adjusts the standards and
requirements according to the quality of the ore.
Site Selection Management
materials, steel, chemicals and other products and requires
Quality control of the production of lead and zinc
suppliers to strictly comply with national and local laws
concentrate products takes place principally
in the
and regulations.
In the context of global warming, in order to reduce
greenhouse gas emissions, Griffin selects suppliers
providing environmentally friendly products or services.
processes of milling, flotation, and dehydration. Griffin
continuously monitors sampling and processing, to
ensure the maintenance of the lead, gold, silver and zinc
concentrate grades and moisture content to meet customer
requirements.
31
RepoRt and accounts 2022 sustainability, environment and loCal Community (continued)
In the milling process, overflow ball mills and cyclones
surfaces, 3D models of resources and reserves and reserve
are used to form a closed-circuit grinding system, which
management software. Technical research is undertaken
can ensure the granule size required for flotation in the
to support the green and innovative development of the
processing of ore and ensure the recovery rate of various
enterprise. This includes:
metals. The milling process is also equipped with automatic
sampling equipment for sampling and assaying to analyse
and test the grade and particle size of the product at various
stages in the process.
• Advanced Micromine 3D mining engineering
software and digital technologies such as multi-
pointer geological body boundary rapid delineation,
to carry out ore body definition, reserve calculation
In the flotation process of lead and zinc, three stage cleaners
and 3D modelling, improving the efficiency of mineral
maintain the concentrate grade. Automatic samplers are
resources exploration and economically mining on
installed to check data in the circuit. Griffin continually seeks
the basis of realising sustainable development and
to optimise the flotation process and improve the flotation
utilisation of mineral resources;
conditions to simplify the operation. In 2020, an automatic
dosing system was installed to replace manual dosing, making
the dosing process control more accurate and product quality
more stable. For the key points in the flotation process,
manual sampling is conducted every two hours to analyse
the concentrate moisture so as to correct chemical or other
inputs into the process, or repair equipment, to ensure stable
production and quality concentrates.
In the dewatering process, a two-stage dewatering
process consisting of thickener and ceramic filter keeps
the moisture of the concentrate product at about 10% to
better meet the requirements of customers. The dewatered
zinc concentrate is stored in bulk while the dewatered lead,
gold and silver concentrate is packed in concentrate bags.
Equipment and devices are checked and repaired regularly
to maintain normal operations and stable processing
and to further improve the product quality. In addition,
Griffin has formulated an annual training plan to cover
requirements for product quality and other special training
for employees and regular meetings take place to deliver
training to all employees.
DIGITAL MINING CONSTRUCTION
• A frequency conversion control system has been
adopted to adjust the operational frequency of the
main fan and air compressor through remote operation
according to the change and demand of underground
production, so as to reduce operational energy
consumption of the equipment and save operational
and labour costs
Griffin has established a
long-term co-operative
relationship with the Beijing University of Science and
Technology to jointly develop and innovate and are
committed to providing advanced professional technical
service support for on-site production.
PROTECTION OF RIGHTS AND
INTERESTS OF CUSTOMERS
Griffin adheres to the principle of “promoting cooperation,
mutual benefit and win-win”, and aims to establish a
harmonious and stable cooperative relationship with
customers, constantly improving customer service and
helping customers solve problems. Griffin has established
a complaint and supervision mechanism to identify any
problems with product quality. Concentrate samples are
taken to check metal and moisture content internally
Griffin believes that scientific and technological innovation
and externally. Griffin takes responsibility for any quality
is essential to promote high quality development and
problems arising in accordance with relevant contracts and
encourages research and innovation. It does this by
laws and compensates the customers where appropriate.
bringing together technical talent teams, setting up groups
to tackle key scientific and technological problems and
ensures sufficient investment funds are available.
In 2022 Griffin did not receive any complaints or returns
regarding the quality of its products.
A digital mine construction programme has been developed
Protection Of Customer Privacy
to improve process technology and thereby optimise and
improve mining design and mining management. Digital
systems are utilised such as automated centralised control
systems, mine automation systems, unmanned working
In order to protect customer privacy Griffin abides by the
Personal Information Protection Law of the People’s Republic of
China, the Network Security Law of the People’s Republic of
32
Griffin MininG LiMited China and other laws and regulations and has established
• Daily supervision and regular management review to
a system which specifies those employees responsible for
optimise the anti-corruption and anti-fraud reporting
maintaining the confidentiality of customer information.
process and ensure compliance requirements are
Griffin provides regular training to employees on the
implemented;
confidential management of customer information and
conducts regular inspections to enforce the requirements
of its policy.
• Regular
training
to strengthen
the
ideological
education of anti-corruption and further improve
compliance with Griffin’s policies; and
STRENGTHENING RISK MANAGEMENT
AND REGULATING BUSINESS ETHICS
• Formulation of anti-corruption provisions in supplier
agreements and goods and services contracts, adhering
Griffin has formulated strategies for identifying material
risks; ensuring appropriate mitigating measures are in
place, regularly evaluating operational and business risks;
to transparent procurement.
Whistle-blowing
and seeking to strengthen the controls on internal risk.
Griffin takes very seriously the process of whistle-blowing
Griffin endeavours to ensure its management, partners,
and has established protection for whistle-blowers to
suppliers and customers operate to high standards and
eliminate the occurrence of irregularities and disciplinary
actively works with them to conduct business with integrity
incidents. Griffin encourages all employees to participate
in the supervision of integrity and honesty, and has
established a two-way reporting channel. Whistle-blowers
can report anonymously, and Griffin keeps the content of
whistle-blowers’ reports strictly confidential and prohibits
any form of retaliation against whistle-blowers to fully
protect each whistle-blower from threats, suspension,
transfer, dismissal or other discriminatory punishment.
ENGAGEMENT WITH LOCAL
COMMUNITIES
Griffin has followed the PRC national call to address
community needs in a variety of ways, promoting
support mechanisms and public welfare, helping to build
infrastructure where it operates and creating a harmonious
and stable community relationship. The Community
Development Plan sets out its commitment to the social
welfare of the local communities.
In 2022, Griffin donated a total of Rmb3,462,800 and
provided 100.25 hours of voluntary support.
and ethics.
Anti-Corruption Management
Griffin adheres to the business values of fairness,
transparency, integrity and honesty, to comply with
the Anti-Unfair Competition Law of the People’s Republic
of China, the Anti-Money Laundering Law of the People’s
Republic of China, the Anti-Monopoly Law of the People’s
Republic of China and other relevant laws and regulations.
Griffin has formulated employee codes of conduct, set
requirements for business ethics and commits to ongoing
improvements in its compliance management system.
Griffin has zero tolerance for any unethical practices such
as bribery, extortion, fraud and money laundering, and
has implemented a series of initiatives to strengthen anti-
corruption management. These include:
• Anti-corruption policies and employee code of conduct,
supervision of the business activities of employees and
third-party contractors, and prohibition of directors
and employees from engaging in illegal or unethical
economic practices;
• Clearly stated prohibition against taking and offering
bribes and a requirement for all employees to declare
in advance when offering gifts and entertainment;
• Regular review and update of the code of conduct by
the Head of Human Resources and the Operation
Manager at Caijiaying to identify the possible risks in
the business and operational links;
33
RepoRt and accounts 2022 sustainability, environment and loCal Community (continued)
Charity Donation
Rural Revitalisation
Griffin is committed to creating value for the local
community and developing together with the community.
In 2022, Griffin invested Rmb604,800 in residents’ pension
subsidies to improve their living conditions. Griffin
donated Rmb75,000 to the Hebei Youth Development
Foundation as a scholarship to support college students
from Sanhao Township, Zhangbei County, Zhangjiakou
City, and Hebei Province, to encourage their academic
development.
In September 2022, Griffin donated 950 bags of flour and
500 bags of rice to Caijiaying Village for the Mid-Autumn
Festival. In addition, Griffin sent its medical staff every
month to provide free nucleic acid testing services to the
residents of Caijiaying Village and donated materials to
the Zhangbei County government and relevant epidemic
prevention departments of Zhangjiakou City, Hebei
Province.
Griffin supports rural revitalisation to achieve common
prosperity and actively assists in rural development. In
2022, Griffin invested Rmb1,857,000 in repairing houses
for local villagers and alleviating the impact of blasting
vibration and other operations. Griffin also invested
Rmb700,000 in a community fund to strengthen the
infrastructure around the mining area. To facilitate the
travel of residents around the mining area, Griffin invested
Rmb250,000 in repairing potholes on the roads around the
mining area to reduce traffic safety hazards. To prevent the
soil erosion of farmland by rainwater in the rainy season,
Griffin invested Rmb45,000 in widening the road in
Baishuinao Administrative Village, Sanhao Township and
in helping farmers lay culvert pipes in the upper reaches of
farmland. In addition, Griffin helped villagers replace water
pumps, helping to solve the water problems in Xiaobazi
Administrative Village and thereby improve the overall
quality of life of the surrounding residents
34
Griffin MininG LiMited FinanCial results
SUMMARY
Despite operations being suspended by the Chinese
authorities for external events, for nearly five months
down on that produced in 2021, whilst zinc, gold and lead
metal in concentrate prices achieved in 2022 were higher
than those achieved in 2021.
in 2022, the Company and its subsidiaries (together the
With the suspension in operations during 2022 mining,
“Group”) recorded;
• Revenues of $94,397,000 (2021: $121,648,000);
haulage, and processing costs (cost of sales) were down
11.2%. This reduction is less than the reduction in tonnes
milled of 15.6% as a result of fixed costs and higher
• Gross profit of $38,252,000 (2021: $58,424,000);
depreciation charges as assets are brought into use.
• Operating profits of $15,625,000 (2021: $36,925,000);
Operating (administration) costs excluding minority
• Profit before tax of $15,272,000 (2021: $36,526,000);
• Profit after tax of $7,704,000 (2021: $25,376,000); and
• Basic earnings per share of 4.41 cents (2021: earnings
per share 14.53 cents).
The results for 2022 were severely impacted by various
suspensions in operations for nearly five months of the
year. First quarter results were impacted by the enforced
suspension of all operations at the Caijiaying Mine for the
Chinese Lunar New Year holiday celebrations, the Winter
Olympics and the subsequent Winter Paralympics. Mining
recommenced on the 23 March 2022 and processing on
the 25 March 2022. Operations were again suspended by
the Chinese authorities restricting the supply and use of
explosives for the duration of the Chinese Communist
National Party Congress from 22 September 2022 to 17
November 2022.
service charges
interests rose by 14.9%, reflecting
inflationary costs in China, additional fees on the
appointment of new directors and the resumption of travel.
TURNOVER
Turnover in 2022 of $94,397,000 was down $27,251,000
(22.4%) on that achieved in 2021 of $121,648,000. This
reflects zinc in concentrate sales down $20,495,000
(21.1%) with 30,422 tonnes of zinc metal in concentrate
sold in 2022 compared with 41,949 tonnes in 2021, a
decrease of 27.5% with lower production, and average zinc
metal in concentrate prices received in 2022 of $2,513 per
tonne compared with $2,311 received in 2021 an increase
of 8.7%. This price increase reflects an increase in market
prices with the average LME zinc metal price of $3,488 per
tonne in 2022 compared with $3,007 in 2021 (an increase
of 16.0%), mitigated by an increase in smelter treatment
As a result of the suspensions in operations in 2022, Group
charges with average smelter treatment charges equating
profits before tax decreased from $36,526,000 in 2021 to
to 27.9% of the average LME zinc price in 2022 compared
$15,272,000 in 2022 with metal in concentrate production
with 23.1% in 2021.
Sales may be summarised as follows:
Zinc metal in concentrate revenue before royalties ($000s)
Lead metal in concentrate revenue before royalties ($000s)
Silver metal in concentrate revenue before royalties ($000s)
Gold metal in concentrate revenue before royalties ($000s)
Royalties
Zinc metal in concentrate sold (tonnes)
Lead metal in concentrate sold (tonnes)
Silver in concentrate sold (ozs)
Gold in concentrate sold (ozs)
Average price per tonne received (zinc) ($)
Average price per tonne received (lead) ($)
Average price per ounce received (silver) ($)
Average price per ounce received (gold) ($)
2022
76,456
2,052
3,829
17,672
(5,612)
30,422
926
221,506
10,649
2,513
2,216
17.9
1,814
2021
96,951
2,216
5,326
24,373
(7,218)
41,949
1,069
269,505
14,447
2,311
2,074
20.4
1,748
35
RepoRt and accounts 2022
FinanCial results (continued)
Lead and precious metal in concentrate sales in 2022
With lower throughput, recoveries, and the gold grade
of $23,553,000 were down $8,362,000 (26.2%) on that
down 0.11 g/t (15.7%) gold metal
in concentrate
achieved in 2021 of $31,915,000. This reflects less lead
production in 2022 was down 29.8% on that produced in
and precious metals sold, with lower production, with
2021.
higher gold and lead prices received, but lower silver prices
received.
COST OF SALES
With lower throughput and with the silver head grade
down 0.88 g/t but better recoveries silver metal in
concentrate production in 2022 was down 16.7% on that
produced in 2021.
Total cost of sales in 2022 of $56,145,000 was down
$7,079,000
(11.3%) on that
incurred
in 2021 of
OPERATING EXPENSES
$63,224,000. In the main this reflects less tonnes mined,
hauled, and processed in 2022 than 2021. Operations
in 2022 were impacted by the enforced suspensions in
operations for the Winter Olympics and PRC National
Party Congress. Whilst costs were down 11.2%, ore tonnes
mined were down 12.2% and ore tonnes milled were down
15.6% with fixed costs mitigating further cost reductions.
Mining costs in 2022 were down $2,221,000 (11.7%) on
that in 2021 reflecting a 12.2% decrease in tonnes of ore
mined, and reduced operational development work. Some
further fixed cost savings were made in mine administration
and other costs.
Haulage costs in 2022 were down $1,089,000 (9.5%) on
that in 2021 reflecting a 14.3% decrease in tonnes of ore
hauled and a 10.4% increase in average distances hauled
from 2.97 km in 2021 to 3.28 km in 2022.
Processing costs in 2022 were down $2,364,000 (14.1%) on
that incurred 2021 with a 153,855 tonne (15.6%) reduction
in ore throughput and fixed costs mitigating a further
reduction in costs. There was a modest improvement in
tailings being backfilled as opposed to discharged to dry
tailings of 48% compared with 42% in 2021.
Depreciation charges in 2022 were up $3,276,000 (22.6%)
on that incurred in 2021 as assets are brought into use
and with an additional charge to ensure all development
costs capitalised, including future development costs as
estimated in the Life of Mine Plan, are fully written off at
the end of the Life of Mine.
PRODUCTION
Tonnes of ore processed in 2022 were down 15.6% on that
in 2021. With the zinc head grade down 0.41% in absolute
terms on that in 2021, and recoveries down 0.1% on that
in 2021, zinc metal in concentrate production was down
23.5% on that in 2021.
Operating (administration) costs (excluding service fees
to Yuanrun) in 2022 of $20,228,000 were up $2,605,000
(14.9%) on that incurred in 2021 of $17,623,000.
Hebei Hua Ao’s operating costs in 2022 were up $1,026,000
(8.4%) on that incurred in 2021 albeit this is masked
by a 3.4% fall in the value of the Renminbi. Renminbi
denominated administration costs have increased by
12.1%, primarily on increased salaries and bonuses and
ongoing increased environmental and safety regulatory
compliance costs.
Griffin and other subsidiary company costs were up with
increased directors’ fees and bonuses, increased travel costs
and increased directors’ and officers’ liability insurance
premiums.
Service fees to Yuanrun of $2,399,000 based on 11.2% of
the profits of Hebei Hua Ao, as adjusted for force majeure
days when operations were suspended, has been charged to
profit and loss in 2022 compared with $3,876,000 in 2021.
PROFITS BEFORE TAX
After interest, foreign exchange adjustments and other
income, a profit before tax of $15,272,000 was recorded
for 2022 compared to $36,526,000 in 2021. The profit
before tax in 2022 was after charging / crediting;
• FX losses of $387,000 (2021: losses $51,000);
• Bank interest charges of $nil (2021: $309,000);
• Finance lease interest $48,000 (2021: $11,000);
•
Interest in respect of rehabilitation provisions $87,000
(2021: $84,000);
•
Interest receipts of $369,000 (2021: $236,000);
• Losses on the disposal of fixed assets of $404,000 (2021:
$293,000);
36
Griffin MininG LiMited • Provisions against capitalised intangible assets (Hebei
Sino Anglo) $nil (2021: $11,000); and
• Other income of $204,000 (2021: $124,000).
TAXATION
Taxation of $7,568,000 has been provided for in 2022
(2021: $11,150,000) being 25% of Hebei Hua Ao’s profits
under PRC GAAP amounting to $6,931,000; withholding
tax primarily of 5% on intercompany dividends received
of $803,000; UK corporation tax on Griffin Mining (UK
Services) Limited profits of $67,360 and a deferred tax
credit of $260,000.
CASH FLOW
Cash generated from operations of $15,734,000 (2021
$42,880,000) have been used in further developing the
mine and facilities.
NET ASSETS
Attributable net assets per share at 31 December 2022 was
$1.40 (2021: $1.50).
37
RepoRt and accounts 2022 38
Griffin MininG LiMited Mechanised Long Hole Production Rig
39
RepoRt and accounts 2022 strategiC review
OVERVIEW
The objective of the directors and management is to
ACQUISITIONS AND FURTHER
PROJECTS
ensure the long-term sustainability of the Company and its
Whilst the Company continues to develop the Caijiaying
business to benefit its shareholders and other stakeholders.
Mine and explore the surrounding area, it also continues
To achieve this objective, the directors and senior
to search for, and investigate, other potential acquisitions
executives seek to add value, manage risks and minimise
of both gold and base metals projects that may be brought
costs whilst pursuing economic returns commensurate to
into long term, economic production for a capital cost
the risk taken pursuing the following strategy.
that provides a substantial and justifiable return on equity
In view of the significant potential of the Caijiaying
Mine and surrounding areas and given the Company’s
knowledge and expertise in the PRC, 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 the PRC. In addition, the directors and
senior executives evaluate other mining companies and
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.
projects worldwide to ascertain whether any acquisition
To effect this strategy, the Company has further expanded
can be made which has the possibility of matching the
the scope and activities of China Zinc to encompass this
financial returns provided by the Caijiaying Mine.
corporate goal.
CAIJIAYING MINE
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
focused on identifying geological targets and evaluating
the potential for significant additional resources. Whilst
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.
the existing Mineral Resource estimate confirms the
CLIMATE CHANGE
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
has enabled production rates 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.
Griffin studies the possible impact of climate change on
business operations and actively tackles climate change
where it is able to do so. This has involved identifying risks
related to climate change such as extreme weather and
sudden natural disasters including rainstorms, snowstorms,
drought, etc. that may lead to power supply interruptions
and production accidents, causing significant economic
losses and threatening personal safety. Accordingly, Griffin
has developed relevant measures to address these risks
including back-up diesel generators and ensuring sufficient
supplies of essential goods. In 2021, the Company upgraded
the emergency power generation facility from 3,200KW
to 4,000KW. The upgraded facilities can ensure the
continued operation of underground ventilation, drainage
and mill maintenance work in case of an emergency,
thereby reducing the risk of underground workers being
trapped due to power outages.
40
Griffin MininG LiMited Corporate governanCe
The board of directors of Griffin has responsibility for
Director (“SID”), Clive Whiley. Independent directors
setting the overall strategy of the Group, its performance,
therefore now constitute 50% of the Board. Dean Moore
management and financial matters including, inter alia, the
was appointed Chair of the Remuneration Committee
approval of budgets, significant capital expenditure and
and Linda Naylor is Chair of the Audit Committee. The
financial reports. Key decisions are based on the regular
shareholdings of these three non-executive directors are
review of financial performance, capital and operational
less than 0.2% of the Company’s issued share capital
budgets and regular operational reports.
and they are free from any business or other relationship
The directors continue to seek to add value and minimise
costs to ensure the long-term sustainability of the Company
and its business in order to fulfil their responsibility to
benefit shareholders and other stakeholders.
The Company and its directors have identified and keep
under consideration the risks facing the Company and its
subsidiaries (“the Group”). These risks and how they are
managed are detailed in the directors’ report on pages 52
to 57.
Griffin is incorporated in Bermuda, a jurisdiction which
does not have a formal overarching corporate governance
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. As required by
Bermuda company law, all the directors are shareholders
in the Company to align their interests with those of the
shareholders.
The Company and its directors have adopted the Corporate
Governance Code published by the UK Quoted Company
Alliance (“QCA”) and are guided by the principles
contained therein, so far as the Board of Directors is able
and considers practicable.
The Board meets quarterly with all members in attendance
in 2022. The Board is headed by a Chairman, who whilst
not employed by the Company, spends a significant part
of his time on the Company’s business. The Chairman’s
services are provided by Keynes Capital (see report of the
Remuneration Committee on page 46). The Company has
no Chief Executive Officer. Accordingly, the roles of Chief
Executive Officer and Chairman have not been separated
as recommended by the QCA Code for the above reason.
which could materially interfere with the exercise of
their independent judgement. Although a non-executive
director, Adam Usdan is not an independent director as he
is also a major shareholder.
During 2022, the SID received additional compensation
to reflect his commitment to make 25% of his time
available to help the Chairman with strategic support.
The Chairman requires this support since he has the
operational responsibilities of a Chief Executive Officer
and the Board is of the view that the specialist nature of
this support could not be sourced from the Company’s
advisers. Notwithstanding the additional responsibilities
and remuneration received by the SID, the Board’s
judgement is that he remains an independent director
as the additional responsibilities represent a minority of
his employment and he is demonstrably independent in
character and judgement.
The SID supports the Chairman and executive director by
regularly communicating with the major shareholders to
build a strong relationship with them, other shareholders
and potential investors.
The Chairman and Finance Director maintain regular
contact with significant shareholders and the Company
retains an office in 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.
The Board
is supported by the Audit Committee
and Remuneration Committee. The reports of these
Committees are given on pages 44 to 49. A Nomination
Committee has not been formally established with, in
effect, the whole Board fulfilling this function.
The Finance Director is employed full-time. He is also the
The existing board of directors brings a balance of skills
Company Secretary and, in accordance with best practice,
and experience to the Company, including legal, financial,
these roles are to be separated during 2023.
mining and market expertise. Details of each director
Two independent non-executive directors were appointed
to the Board in 2022 to join the Senior Independent
are given in the biographies on page 50. All directors are
subject to re-appointment annually at the annual general
meeting of the Company’s shareholders.
41
RepoRt and accounts 2022 Corporate governanCe (continued)
Dal Brynelson, a director of the Company’s Chinese
has formal procedures regarding the avoidance of bribery
subsidiary Hebei Hua Ao, provides additional support to
and corruption. The Group engages personnel regardless
the Board who benefit from his 40 year involvement in the
of race or gender.
mining industry.
The Company has appointed a Chief Operating Officer
As a result of the major changes to the membership of the
who reports directly to the Chairman, who in turn reports
Board in 2022, a review of Board effectiveness has been
directly to the board of directors. The Chief Operating
delayed until 2023. The Board is seeking to establish
Officer oversees the Group’s operations with individual
a regular schedule of meetings during 2023, including
department heads reporting directly to him. The Company
visits to the Caijiaying Mine Site in the PRC, following
has appointed a Chief Financial Officer in China who
the appointment of the new directors. The Chairman and
reports to the Chief Operating Officer and directly to the
Finance Director regularly visit the Group’s operations
Finance Director, who in turn reports to the Chairman and
(when possible, following the restrictions imposed due to
the board of directors. Individual department managers are
the Covid pandemic) to meet with management and other
able to communicate directly to the Chairman concerning
personnel. When travel has not been possible meetings
any issues of concern.
have been held virtually.
The Company, through Hebei Hua Ao, has invested
The safety of all personnel working at the Group’s
heavily in the local community in China and continues
operations is a priority with formal procedures in place to
to maintain and further implement best practices for the
prevent and report any safety and environmental issues.
protection of the environment and for the benefit of the
The Group will not deal with any organisation or individual
local community.
which it believes to be involved with slavery. The Group
Further details are given on pages 33 to 34.
Griffin directors:
Back row from left to right: Dean Moore, Roger Goodwin (Finance), and Adam Usdan.
Front row from left to right: Clive Whiley, Mladen Ninkov (Chairman), and Linda Naylor.
42
Griffin MininG LiMited stakeholder engagement
The Board has identified the following internal and external
Griffin depends on good relations with all stakeholder
stakeholders. The needs, interests and expectations of
groups. Feedback from all channels of communication
these stakeholders are regularly monitored and assessed
with stakeholders is integrated into Griffin’s strategy.
with the understanding that the long-term success of
Main Stakeholders
Key Issues
Communication and Feedback Channels
Government and regulatory
Implementation of laws, regulations
Compliance with laws and regulations
agencies
and policies.
including payment of taxes
Corporate governance and compliance
Daily communication and reporting
operation
(see Corporate Governance on pages
Safety and environmental protection
41 & 42)
Shareholders and investors
Profitable operations
Regulatory reporting
Sustainable development governance
Equal opportunity employer
Human rights policy disclosure
Anti-slavery policy
Anti-corruption policies
Bribery and corruption policy
Employees and their families
Salary and benefits
Employee performance reviews
Training and development
Staff representative conference
Health and safety
Regular safety reporting, safety
inductions and safety meetings
Suppliers and business partners
Customer service
Dedicated procurement department
Supply chain management
Product quality
Independent assay and moisture checks
of concentrate sold
Community
Community investment
Involvement in the local community
Community benefits
Local community support, including
infrastructure, poverty alleviation,
schooling
Environmental protection and ecology Care and protection of the local
environment with minimal discharges
43
RepoRt and accounts 2022 report oF the audit Committee
The Audit Committee assists the main board of directors
and the corporate governance statement (insofar as it
in its oversight of the Company’s financial reporting,
relates to the audit and risk management).
internal control and risk management within the corporate
governance framework.
In order to fulfil these duties, the Audit Committee receives
regular financial and other reports from management and
The Chair is Linda Naylor, a qualified Chartered
has unfettered access to employees of the Company and
Accountant with relevant sector experience who was
its subsidiaries. The Audit Committee seeks to ensure all
appointed on 10 May 2022. The other members, Adam
reporting is up to date and relevant to shareholders, to aid
Usdan and Clive Whiley, bring extensive fund management
their understanding of the Company and its performance.
and capital markets experience to benefit the work of the
Committee. Dal Brynelsen resigned on 5 May 2022.
Significant issues considered by the Committee
Four meetings of the Committee took place in 2022 with
in relation to the 2022 Financial Statements
all those who were members in attendance. A review of the
(a) The value of fixed assets and the need for any
Committee’s effectiveness will be held in 2023 as part of
impairment provisions based on the updated life of
the Board’s effectiveness review.
Financial Reporting
The Audit Committee monitors the integrity of the
financial statements of the Company, including its annual
and interim reports, preliminary results and any other
mine plan prepared by the COO. The Committee
considered the key judgements made by management
in relation to commodity price forecasts, operating
and capital expenditures, discount and exchange rates
as well as mineral reserves and resources estimates
together with processing capacity.
formal announcement relating to its financial performance
(b) The conversion of Hebei Hua Ao from a Joint Venture
whilst reviewing significant financial reporting issues and
to a limited liability company with an indefinite life
judgements contained within those announcements before
to enable the extension of the business licence which
recommending their approval to the Board. The Audit
is currently due to expire in 2037. The Committee
Committee also reviews summary financial statements,
received regular updates on progress to achieve this
significant financial returns to regulators and any financial
objective from management.
information contained in certain other documents, such as
announcements of a price sensitive nature.
Internal Controls
The Audit Committee reviews and challenges where
The Audit Committee continued to keep the effectiveness
necessary:
(a) The consistency of, and any changes to, accounting
policies, both on a year on year basis and across the
Company and its Group;
(b) The methods used to account for significant or unusual
transactions where different approaches are possible;
of the Company’s systems of internal controls under
review. The Committee monitors and reviews the budgets
prepared each year for approval by the Board. Actual
performance against budget is presented in the monthly
management accounts. There is no internal audit function
as due to the size of the Group the current level of internal
controls are considered to be adequate. Monitoring of
internal controls also takes place through the external
(c) Whether the Company has followed appropriate
audit.
accounting standards and made appropriate estimates
and judgements, taking into account the views of the
external auditor;
Risk Management
The Audit Committee monitors and reviews management’s
(d) The clarity of disclosure in the Company’s financial
approach to risk management including the process of
reports and the context in which statements are made;
the identification of emerging risks and their mitigation.
and
(e) All material information presented with the financial
statements, such as the operating and financial review
The risks and the process of identification is then further
scrutinised and approved by the Board as a whole.
44
Griffin MininG LiMited Whistle blowing
(vi) Monitoring
the auditors’ compliance with
The Audit Committee
reviews
the Company’s
arrangements for its employees to raise concerns, in
confidence, about possible wrongdoing
in financial
reporting or other matters. The Audit Committee
ensures that these arrangements allow proportionate and
independent investigation of such matters and appropriate
follow up action.
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
process for new auditors and if an auditor resigns the
Audit Committee shall investigate the issues leading to
this and decide whether any action is required;
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) Annual assessment of 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 has the right 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
(b) Oversees the relationship with the external auditor
engagement and the materiality is appropriate;
including (but not limited to):
(i) Approval of their remuneration, whether fees for
audit or non audit services and that the level of
fees is appropriate to enable an adequate audit to
be conducted;
(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) Annual assessment of 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;
(iv) Satisfying itself that there are no relationships
(such as
family, employment,
investment,
financial or business) between the auditor and the
Company (other than in the ordinary course of
business);
(v) Agreeing with the Board a policy on the
employment of
former employees of
the
Company’s
auditor,
then monitoring
the
(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
(i) Develops and implements a policy on the supply of
non-audit services by the external auditor, taking into
account any relevant ethical guidance on the matter.
Linda Naylor
Chair of the Audit Committee
implementation of this policy;
9 May 2023
45
RepoRt and accounts 2022 report oF the remuneration Committee
To comply with Corporate Governance requirements set
is considered by the Remuneration Committee, with the
by AIM, a remuneration committee (the “Remuneration
assistance of outside executive compensation consultants,
Committee”) was formed in 2018 which now comprises
on a year by year basis.
the non-executive directors Dean Moore (Chair), Clive
Whiley, and Adam Usdan. Dal Brynelsen resigned on 5
May 2022.
THE ROLE OF THE REMUNERATION
COMMITTEE
The Remuneration Committee
is responsible
for
determining and agreeing with the Company’s board
of directors 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 executive management of the
Group, as it is designated to consider. The Renumeration
Committee is also responsible for the review of, and making
recommendations to, the board of directors in connection
with share option plans and performance related pay and
their associated targets and for the oversight of employee
benefit structures across the Group.
Apart from the Finance Director, all the other 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 PRC.
The remuneration of non executive directors is a matter
for the board of directors. 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
Nevertheless, the Remuneration Committee continues
to assess various remuneration policies to attract and
retain future high-calibre executives and motivate them
to develop and implement the Group’s business strategy
in order to 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;
• Total incentive-based rewards will be earned through
the achievement of performance conditions consistent
with shareholder interests;
• 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 of 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.
This has included the services of FIT Remuneration
Consultants and Deloittes. No director has been involved
in deciding the level and composition of their own
remuneration.
inappropriate to have an extensive and prescriptive formula
The Finance Director receives an amount of fixed pay made
for determining one employee’s total compensation
up of a base salary, fixed fees from subsidiary companies
package. Accordingly, the executive director’s remuneration
and pension contributions.
46
Griffin MininG LiMited Long-term performance is incentivised by way of the grant
individuals, and having further considered the services
of shares and share purchase options.
provided by Keynes under its consultancy agreement with
The board of directors seeks to strengthen the alignment
of director, employee and shareholder interests.
Executive directors’ remuneration for 2022
With effect from 1 April 2022 the salary payable to
the Finance Director was increased from £315,000 to
£350,000, in recognition of his continuing service and
having not received an increase in fees from the Company
since 1 January 2014.
A bonus of £87,873.46 was awarded to the Finance
Director in 2022 in recognition of the services provided
and, in particular, financial management during the
Covid-19 pandemic.
the Company, the Keynes Capital consultancy agreement
with the Company was renewed in September 2022. Having
last been increased with effect from 1 July 2019, the fees
payable to Keynes Capital were increased from £2,000,000
to £2,200,000 per annum with effect from 1 September 2022.
In recognition of the exceptional services provided by
Keynes Capital and, in particular, in obtaining a new
mining licence at Caijiaying covering both Zones II & III,
a bonus of £600,000 was paid to Keynes Capital in two
tranches in 2022.
The consultancy agreement with Keynes Capital is subject
to appropriate performance criteria and a minimum one
month termination notice. In addition to the above,
the Chairman received directors’ fees from subsidiary
In 2022, Roger Goodwin (Finance Director and Company
companies of $219,000 in 2022 (2021: $210,000).
Secretary) received a basic salary of £341,250 (2021:
£315,000) and pension contributions of £30,000 (2021:
£30,000). In addition, he received directors’ fees of
$219,000 (2021: $210,000) 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
Over the past 25 years, 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 $3,367,000 (2021: $2,737,000), for
the provision of advisory and support services including
office premises, staff and consultants to Griffin and its
subsidiaries in 2022.
Having considered relevant data on directors fees,
particularly for companies of comparable size and
complexity in the mining sector and having considered
inflationary factors, currency exchange rates, the state of
the mining sector and limited number of suitably qualified
Long Term Incentives
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, all of
which subsequently vested. 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 2023. 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, all of
which subsequently vested. 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 2023.
An offer was made on 30 December 2022 to all option
holders for the purchase and cancellation of outstanding
options over 19,520,000 shares in the Company (“the
Offer”). Acceptances were received from option holders
in respect of options to purchase 17,520,000 shares in
the Company, which have subsequently been purchased
and cancelled, which based on the mid-market price on
the Offer date of 76 pence per share, have resulted in
10,130,526 new ordinary shares being issued pursuant to
the Offer for nil consideration.
47
RepoRt and accounts 2022 report oF the remuneration Committee (continued)
At 31 December 2022 the following directors held share
purchase options in which they have an interest:
Name
Number of options
Number of options
exercisable at 40 pence
exercisable at 30 pence
per new ordinary share per new ordinary share
Vested
Vested
Roger Goodwin
Finance Director
500,000
1,500,000
On 4 April 2023 7,805,000 new Ordinary Shares in the
Company were issued under a Share Incentive Plan
(“the Plan”) including the following persons holding
management responsibility under the terms of the Plan:
Mladen Ninkov (Chairman)
John Steel (Chief Operating Officer)
Number of Shares
6,000,000
250,000
Shengchang Jin (Deputy Chairman &
Deputy General Manager – Hebei Hua Ao)
250,000
The new ordinary shares issued are subject to certain
contractual terms including that the shares issued will
not be sold or otherwise transferred or disposed of before
31 December 2024, except in the event of a Transaction
occurring with the Company, and that the shares issued
will be returned in the event of malus and pro rata return
of the shares upon leaving the Company or its subsidiaries
before 31 December 2024. This acknowledges the crucial
personal relationships developed by the Chairman over the
past twenty five years in the PRC and the importance of
others in retaining their services which would be difficult
to replace and critical to the future of the company in the
PRC.
Non-executive directors
The non-executive Directors’ fees were last reviewed in
March 2022 and held at £66,125 per annum.
Since 1 April 2022, Clive Whiley has been engaged to
provide 25% of his time for consultancy services to the
Company, being in addition to that expected of him as a
director of the Company, at a rate of £20,000 per month
subject to UK PAYE, in addition to his non-executive fees
of £66,125 per annum, on a rolling 90 day notice period.
48
Griffin MininG LiMited
Total Directors’ Remuneration
The table below sets out the total remuneration payable to the Directors:
Fees Salary
Pension Total
2022
contributions
Fees
Salary
Pension
Contributions
$000
$000
$000
$000
$000
$000
$000
Mladen Ninkov*
Dal Brynelsen
(resigned 5 May 2022)
Rupert Crowe
(Died 10 February 2021)
219
66
-
-
-
-
-
-
-
219
66
-
210
186
23
-
-
-
-
-
-
Total
2021
$000
210
186
23
Roger Goodwin
219
556
37
812
210
431
41
682
Dean Moore
(Appointed 5 May 2022)
Linda Naylor
(Appointed 5 May 2022)
Adam Usdan
Clive Whiley
53
53
83
295
-
-
-
-
-
-
-
-
53
53
83
295
988
556
37
1,581
Key personnel
70
1,841
-
1,911
Total
1,058
2,397
37
3,492
-
-
91
61
781
121
902
-
-
-
-
431
1,933
2,364
-
-
-
-
41
5
46
-
-
91
61
1,253
2,059
3,312
* Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received
fees under a consultancy agreement of $3,367,000 (2021: $2,737,000), 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 the directors in 2022. In 2021 Trellus Partners LLP in which Adam Usdan has a controlling
interest exercised share purchase options over 1,166,666 new ordinary shares in the Company at an exercise price of 30 pence
per share.
Dean Moore
Chair of the Remuneration Committee
9 May 2023
49
RepoRt and accounts 2022
direCtors, griFFin mining ltd
Mladen Ninkov, Chairman, holds a Master of Law
as an Audit Partner specialising in the natural resource
Degree from Trinity Hall, Cambridge and Bachelor of
sector. She was Chair of the Audit Committee whilst a
Laws (with Honours) and Bachelor of Jurisprudence
Governor of Portsmouth University. As Finance Director
Degree from the University of Western Australia. He is the
of AIM listed Chaarat Gold Holdings Limited from 2009
principal of Keynes Capital. He has a mining, legal, fund
to 2018, she worked as part of a small executive team. Her
management and investment banking background and is
responsibilities encompassed financial reporting, investor
admitted as a barrister and solicitor of the Supreme Court
relations and fund raising as that company transitioned
of Western Australia. He was the Chairman and Managing
from gold explorer to developer in the Kyrgyz Republic.
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, Non-executive Director, 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
Roger Goodwin, Finance Director, is a Fellow of
30 years. Mr Usdan began his investment career in 1987 at
the Institute of Chartered Accountants in England and
Odyssey Partners where he was responsible for managing
Wales. He has been with the Company since 1996 having
long/short U.S. equity (small to mid-cap) pools of capital.
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.
Clive Whiley, Non-executive Director, has some
forty years’ experience in regulated and listed company
governance positions, both as an executive and non-
executive director, across a wide range of industries and
geographies, including extensive business experience in
the People’s Republic of China since becoming a member
Dean Moore, Non-executive Director, is a Fellow of the
of the London Stock Exchange in 1983. Mr Whiley is
Institute of Chartered Accountants in England & Wales
currently Chairman of Mothercare Plc, China Venture
with extensive public company experience having previously
Capital Management Ltd, First China Venture Capital Ltd,
been Chief Financial Officer at Cineworld Group plc, N
Y-LEE Ltd, and a non-executive Director of Sportech Plc.
Brown Group plc, T&S Stores plc and Graham Group
plc and formerly non-executive Chairman of Tuxedo
Money Solutions Limited. He is currently a non-executive
director of Dignity plc and an independent non-executive
director and Chairman of the Remuneration Committee
at Cineworld Group plc, non-executive director and Audit
Committee Chair of Volex plc and non-executive director
and Chair of the Audit and Remuneration Committees of
THG plc.
Linda Naylor, Non-executive Director, is a graduate
of the London School of Economics and a Fellow of the
Institute of Chartered Accountants in England & Wales. A
former partner in Grant Thornton UK LLP, her experience
has been gained over more than twenty years working as
a Nominated Adviser in the Capital Markets team and
50
Griffin MininG LiMited subsidiary direCtors and senior exeCutives
direCtors
Shegchang Jin, Deputy Chairman and Deputy General
Mining JV, a Sino-Australian JV gold company focussed on
Manager, Hebei Hua Ao, has been with Hebei Hua Ao
Guangxi, China, controlled by Golden Tiger Mining NL,
since its inception in 1994, initially as its Chief Accountant,
an ASX listed company. He has also worked as the Senior
subsequently appointed Chief Financial Officer, then
Geologist for Silk Road Resources (a TSX listed company),
Deputy Chairman and Deputy General Manager of Hebei
responsible for evaluating various gold properties in
Hua Ao. He primarily liaises with the PRC authorities
Gansu Province in central western China. Dr Zhou has
concerning licences, permits and land acquisitions.
considerable experience in the Chinese resources sector.
Dal Brynelsen, Director, Hebei Hua Ao, is a graduate
Shirley Tsang, Director, China Zinc Limited, is a
of the University of British Columbia in Urban Land
Chartered Management Accountant (United Kingdom)
Economics. Mr. Brynelsen has been involved in the
and a CPA (Hong Kong & Australia). She holds an MBA
resource industry for over 40 years. He has been responsible
(Finance) from the City University Business School. She
for the discovery, development and operation of several
started her career as an auditor with Ernst & Whinney
underground gold mines during his career.
before moving on to the business advisory practice for
Dr Bo Zhou, Director, Hebei Hua Ao, holds a PhD in
exploration geology from Sydney University and a BSc
in economic geology from Peking University. He was
Managing Director of Sinovus Mining Ltd, an ASX listed
company with mineral interests in China. Prior to that
he was the General Manager for Guangxi Golden Tiger
senior exeCutives
international clients with Arthur Young. She was head of
the China and Hong Kong business advisor practice from
2003 to 2017 in the Tricor Group. She has considerable
experience in corporate restructuring for international
clients and best practice in corporate governance. She
is currently Managing Director of SEAJA Consultancy
Limited in Hong Kong.
John Steel, Chief Operating Officer, is a graduate Mining
Member of SocEcGeol. He is fluent in Mandarin Chinese
Engineer from the Ballarat School of Mines and holds a
with special emphasis on geological and mineral industry
Master of Business Administration from Deakin University.
terms. Prior to joining Griffin he was Principal Geologist
He is a member of the Australian Institute of Mining and
for Mining Associates, providing competent person
Metallurgy. John has extensive global mining experience
services to inter alia the Hong Kong Stock Exchange; Vice
including over a decade of in site operational expertise with
President Exploration for RH Mining Resources Ltd;
tier one companies in Australia, Canada (Xstrata Mining
Business Development Manager Exploration East Asia for
PLC) and the Middle East (Barrick Gold Corporation).
Sandvik Mining and Construction; JV General Manager
John also has extensive supplier side experience holding
Dragon Mountain Gold in China; Exploration Manager,
country Managing Director positions in Norway (EPC
Lotus Resources plc in Mongolia; Chief Representative
Groupe) as well as General Manager positions with several
for Centerra Gold Inc in China; President and Exploration
explosive and technology service providers within Australia.
Manager for TVI Pacific China; Hunan Pacific Geological
Wendy Zhang, Chief Financial Officer, Hebei Hua
Ao, holds a Master of Accounting degree from Macquarie
University, is a member of the Certified Practising
Exploration Inc; Site Manager Jinfeng for Sino Gold
Limited and Exploration and Business Development
Manager for Newmont China Limited.
Accountants of Australia and is a qualified member of the
Paul Benson, Geology Manager, Hebei Hua Ao, is a
Chinese Institute of Certified Public Accountants. She spent
graduate of Curtain University of Western Australia with
4 years as Financial Controller for Golden Tiger Mining’s
over 30 years’ experience covering mining geology, mine
joint venture operations in China. Previously she was Chief
management, corporate roles, project development, project
Accountant for Shanghai Silk Group and subsequently Ann
evaluation and exploration management. His career has taken
Taylor Shanghai.
Glenn Sheldon, China Zinc Ltd, Business Development
Manager, is a geologist holding a BSc from Adelaide
University. He is a Fellow of the AusIMM and AIG,
him across Australia and Asia to a diverse range of projects
across precious, base and specialty metals, agri-minerals and
uranium. Prior to joining Griffin in 2016 Paul held a number
of senior operational and consultancy roles including CEO
of Aragon Resources.
51
RepoRt and accounts 2022 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 2022.
FinanCial results
The Group profit before taxation for 2022 amounted to US$15,272,000 (2021: US$36,526,000). Taxation of US$7,568,000
(2021: US$11,150,000) has been provided. No dividends were paid in 2022 (2021: nil). US$7,704,000 has been transferred to
reserves (2021: credited US$25,376,000).
The basic earnings per share amounted to 4.41 cents (2021: earnings 14.53 cents). The attributable net asset value per share at
31 December 2022 amounted to 140 cents (2021: 150 cents).
Whilst the directors do not recommend the payment of a dividend at this time, all possible alternatives will be considered in
2023 by the board of directors to either return excess cash to shareholders, or increase shareholder value.
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 2022 and the indication of likely future developments are set out on pages 6 to 40.
direCtors
The Directors of the Company during the year were:
Mladen Ninkov – Australian – Chairman
Dal Brynelsen – Canadian – Non-executive director – Resigned 5 May 2022
Roger Goodwin – British - Finance Director
Dean Moore – British – Appointed 5 May 2022 – Non-executive director
Linda Naylor - British – Appointed 5 May 2022 – Non-executive director
Adam Usdan – American (USA) – Non-executive director
Clive Whiley – British – Non-executive director
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 2022 and their immediate families in the share capital
of the Company were as follows:
Name
At 31 December 2022
At 1 January 2022
or on date of appointment
Ordinary
Options over ordinary
shares, number shares, number exercisable at
40 pence
30 pence
Ordinary
shares, number
Options over ordinary
shares, number exercisable at
40 pence
30 pence
Mladen Ninkov
33,001
-
-
33,001
-
-
Roger Goodwin
877,830
1,500,000
500,000
877,830
1,500,000
500,000
Dean Moore
Linda Naylor
100
10,000
Adam Usdan*
29,209,348
Clive Whiley
100,100
-
-
-
-
-
-
-
-
100
10,000
29,209,348
100,100
-
-
-
-
-
-
-
-
52
Griffin MininG LiMited
* Mr. Adam Usdan is interested in 29,209,348 shares in Griffin representing 16.7% of the Company’s issued share capital,
7,960,221 of which are held directly with the remaining 21,249,127 shares being held by Trellus Partners LLP, the General
Partner of a Limited Partnership in which Mr. Usdan has a controlling interest. Other than this, all the directors interests
disclosed are beneficial.
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, all of which subsequently vested. 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 2023. 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, all of which subsequently vested. 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 2023.
As part of a rationalisation of the capital structure of the Company, an offer was made on 30 December 2022 to option holders
for the purchase and cancellation of outstanding options over 19,520,000 shares in the Company (“the Offer”). Acceptances
were received from option holders in respect of options to purchase 17,520,000 shares in the Company which were subsequently
purchased and cancelled, which, based on the mid-market price on the Offer date of 76 pence per share, resulted in 10,130,526
new ordinary shares being issued pursuant to the Offer for nil consideration. Options granted over 500,000 new ordinary
shares in the Company exercisable at 40 pence per share and options granted over 1,500,000 new ordinary shares in the
Company exercisable at 30 pence per share remain outstanding.
SUBSTANTIAL INTERESTS
Apart from Adam Usdan’s interests in the share capital of the Company, the Company has been notified that:
On 22 January 2021, Andrew Goffe and controlled 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 controlled 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 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 87 to 90.
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
In common with other mining companies
operating in China the Group sells its
products by auction to local smelters
and agents, however, Griffin continues
to review the appropriateness of hedging
and indicative cost of put options.
to
Exposure
fluctuations
the
Renminbi / US dollar
exchange rate.
in
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
costs.
Moderate The Renminbi is loosely pegged to the
US dollar. Management continually
reviews foreign exchange rates and the
appropriateness of hedging.
53
RepoRt and accounts 2022 direCtors’ report (continued)
prinCipal risks and unCertainties Continued
Risk
Comment
Economic Risks (continued)
Business
Impact
Mitigation
The Group is subject to increases in
the market prices for materials, services
and equipment.
Moderate The Group seeks to agree long term
contracts for all major services and
goods supplied.
Griffin’s primary assets are located in
the PRC and therefore exposed to any
adverse changes in the political and
social situations there.
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 25 years in which time the country
has been relatively stable, and retains
good relationships with PRC authorities.
Griffin actively engages and works with
the local PRC authorities and agencies
to identify and minimise the impact of
changes in PRC regulations.
Exposure to increases
in the market prices of
materials, equipment
and services the Group
uses.
Country Risks
Exposure to political
and social risks in the
PRC.
Exposure to changes
in fiscal and regulatory
regime.
Operational Risks
Reliance on Third
Party Contractors
for
particularly
Griffin uses a number of unrelated
contractors,
its
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 Griffin has an extensive occupational
Health and Safety Department
in
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.
Moderate 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 continually monitored
by the PRC Safety Bureaus.
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’s Mineral Resources and Ore
Reserve estimates are prepared by third
party consultants, based in Australia, who
are deemed “experts” under the JORC
Code.
54
Griffin MininG LiMited 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 to single
operation
Griffin is reliant upon a single operation,
being the Caijiaying Zinc Gold mine in
the PRC. Factors affecting operations
at Caijiaying have an impact upon the
Group.
Moderate
Licence administration Griffin,
its
through
subsidiary
companies, holds a number of mining,
exploration and other
licenses and
permits to operate. These normally
include
ongoing
operation and require periodic renewal.
Renewals are not guaranteed.
conditions
for
High
immediate
As noted above, Griffin’s operational
teams
continually monitor mining
and other risks and report to senior
management who report to the Board,
taking
appropriate
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
growth
through
opportunities
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 on a timely basis and
in good order.
Key management
The management of Caijiaying is reliant
on a small number of key personnel,
notably the Chairman, both
inside
and outside of China. Their death,
retirement or departure may have
significant effect on the operations of
the Company.
High
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
a very
information would have
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.
Climate Change
Climate change may have an impact on
operations and demand for metals
Low
Griffin studies the possible impact
of climate change on operations,
identifying risks that may interrupt
operations and developing measures to
counter these.
55
RepoRt and accounts 2022 direCtors’ report (continued)
Risk
Comment
Business
Impact
Mitigation
Other Risks (continued)
Bribery and
Corruption
Moderate
internal policies and
Whilst strict
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 the prosecution of the Group
and its officers.
Pandemic
(Covid-19 / SARS etc)
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
As a rationalisation of the capital structure of the Company, on 30 January 2023 10,130,526 new ordinary shares in the
Company were issued for nil consideration pursuant to the offer to holders of share purchase options for the purchase and
cancellation of outstanding options over 17,520,000 shares in the Company which have subsequently been purchased and
cancelled (notes 19 and 25).
On 4 April 2023, a further 7,805,000 new ordinary shares in the Company were issued as an incentive and to retain the
services of officers and other personnel of the Company, including 6,000,000 for the benefit of Mladen Ninkov. These new
ordinary shares have been issued subject to agreements between each of the said persons and the Company to confirm that
the shares issued will not be sold or otherwise transferred or disposed before 31 December 2024 or earlier in the event of a
Transaction, subject to malus and a pro rata purchase option in favour of the Company if any holder of these shares leaves
before 31 December 2024. Following this issue Mladen Ninkov holds 6,033,001 shares in the company, representing 3.1% of
the Company’s issued share capital.
At 31 December 2022 there were no adjusting post balance sheet events (2021: none).
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. 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 restrictions imposed by
the Chinese authorities during sensitive periods, such as Chinese Communist Party Congresses, and / or to contain outbreaks
of Covid-19 or other pandemics. With this in mind a three month suspension has been built into the cash flow forecasts on a
severe case scenario. This is further considered in the notes to the financial statements on page 70.
56
Griffin MininG LiMited INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP were re-appointed auditors at the Annual General Meeting of the Company held on 15 July
2022 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
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE GROUP
FINANCIAL STATEMENTS
The directors are responsible for preparing the financial statements in accordance with applicable law and regulation.
The Bermuda Companies Act 1981 requires the directors to prepare financial statements for each financial year. Under that
law the directors have prepared the financial statements in accordance with International Financial Reporting Standards
(“IFRSs”) as adopted by the European Union. The directors must not approve the financial statements unless they are satisfied
that the 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 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 financial statements;
• making judgements and accounting estimates that are reasonable and prudent; and
• preparing the 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 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
9 May 2023
57
RepoRt and accounts 2022
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 2022 and of its profit and cash flows for the
year then ended;
• have been properly prepared in accordance with 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 2022 (the “Annual Report”), which
comprise: the Consolidated Statement of Financial Position as at 31 December 2022; 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.
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 and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
our audit approaCh
Overview
Materiality
• Overall Group materiality: $1.1 million (2021: $1.0 million), based on 5% of the 3-year average profit
before tax.
• Performance Group materiality: $0.8 million (2021: $0.8 million).
Audit Scope
• 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, 97% coverage of consolidated
profit before tax and 100% coverage of total assets for the Group.
Key Audit Matters
• Extension of the business licence.
•
•
Impairment assessment of property, plant and equipment.
Impact of Covid-19.
58
Griffin MininG LiMited 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.
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.
Impairment assessment of property, plant and equipment is a new key audit matter this year. Otherwise, the key audit matters
below are consistent with last year.
key audit matter
how our audit addressed the key audit matter
Extension of the business licence
Refer to Note 1 (Significant Judgements and Estimates
In addition to holding discussions with management, we
section) and to Note 11, Property, Plant and Equipment.
have discussed with, and obtained correspondence from,
The new life of mine plan, which includes extraction of
resources from Zone II and Zone III, extends beyond 2037
to 2050. 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.
On 1 January 2020, a new PRC Foreign Investment Law
was enabled, which will automatically convert all joint
ventures, established under the previous Sino Foreign Joint
Venture Law, into limited liability companies by 1 January
2025. Management has appointed legal advisors to convert
their joint venture agreement to a limited liability company.
management’s external legal advisors to understand the
process for extending the term of the business licence from
2037 to 2050 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.
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.
Based on legal advice management expects to be able to
Finally, we considered the adequacy of management’s
extend the term of the business licence as a matter of routine
disclosure of the key judgements in relation to the extension
and at no additional cost.
of the business licence and consider them to be reasonable
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 asset carrying values.
59
RepoRt and accounts 2022 independent auditors’ report to the members oF
griFFin mining limited
key audit matter
how our audit addressed the key audit matter
Impairment assessment of property, plant and equipment
Refer to Note 1 (Significant Judgements and Estimates
We obtained management’s impairment assessment and
section) and to Note 11, Property, Plant and Equipment.
performed the following audit procedures:
As at 31 December 2022, the carrying value of the mining
• we understood and evaluated management’s processes
assets totalled $257.2 million.
and controls in respect of the impairment trigger
As disclosed in Note 11, management assessed the mining
assets
for
impairment
indicators and concluded
that
there were no impairment indicators as at 31 December
2022; accordingly, there is no requirement to perform an
impairment test. Notwithstanding this, management have
undertaken such an assessment based on the new life of mine
assessment process;
• we evaluated and challenged management’s assessment
and judgments, including ensuring that the impact of
climate change, and recent commodity price and foreign
exchange volatility, were appropriately considered in
management’s impairment assessment and conclusions.
plan in line with good practice and governance as well as in
Management prepared a detailed cash flow model on a VIU
line with their established internal policy. As a result, we have
basis to estimate the recoverable amount.
reviewed management’s assessment.
The determination of recoverable amount, being the higher
of value in-use (“VIU”) and fair value less costs of disposal
(“FVLCD”), requires judgement and estimation on the part
of management in identifying and then determining the
recoverable amounts for the relevant cash generating unit
(“CGU”), which is considered to be the Caijiaying Mine.
Recoverable amounts are based on management’s view of
key value driver inputs and external market conditions such
as future commodity prices, budgeted operating expenditure,
Our procedures in respect of the impairment model included:
• verifying the integrity of formulae and the mathematical
accuracy of management’s valuation model;
• consideration of the impact of the latest life of mine plan
assumptions and ensuring that the impairment model
reflected the latest plans;
• assessing the reliability of management’s forecast capital
and operating expenses with reference to comparing
budgeted results with actual performance in prior periods;
the timing and approval of future capital expenditure, the
• used our independent valuation experts to assist us in
most appropriate discount rate and foreign exchange rate.
evaluating the appropriateness of the discount rate used
Estimation uncertainty is considered to be significant due to
and whether it fell within a reasonable range taking into
the long lives of the assets and uncertainty in the quantum and
account external market data;
timing of cash flows, including the uncertain impact of climate
• benchmarking management’s forecast commodity price
change on the Group’s operations, as described in Note 11 to
the financial statements.
and foreign exchange assumptions against our own
collated consensus data to assess whether they fell within
We focused on this area due to the material nature of the
an external analyst range;
balance and the estimates and judgements involved in the
• assessing whether the assumptions had been determined
impairment assessment.
and applied on a consistent basis, where relevant, across
the Group; and
• assessing the disclosure made over the impairment
assessment and the sensitivities within Note 11 of the
financial statements and challenging management where
any inconsistencies were noted.
As a result of our work, we determined that the impairment
assessment performed by management is appropriate and
that adequate disclosures, including around the sensitivities,
have been made in the financial statements.
60
Griffin MininG LiMited independent auditors’ report to the members oF
griFFin mining limited
key audit matter
Impact of Covid-19
how our audit addressed the key audit matter
Refer to the ‘Caijiaying’ and the ‘Sustainability, Environment and
Our procedures and conclusions in respect of going concern
Local Community’ sections of the Annual Report and to Note 1
are included in the “Conclusions relating to going concern”
(Going Concern section) in the Notes to the financial statements.
section below.
Covid-19 was declared a pandemic by the World Health
Organisation on 11 March 2020 and subsequently had an
unprecedented impact on the global economy.
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.
Management have set out in the Annual Report the impact that
Covid-19 has had on the Group and the actions that they have
taken, and continue to take, to address the pandemic and its effect
on the operations.
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.
In 2022 the People’s Republic of China continued to have
significant Covid-19 restrictions, however, there were no major
Covid-19 outbreaks in the Caijiaying Mine during the year.
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 the Alternative Investment Market (“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. We determined the level of involvement, oversight and direction we needed to have in the audit work to
be able to conclude whether sufficient appropriate audit evidence had been obtained. 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, 97%
coverage of consolidated profit before tax and 100% 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
61
RepoRt and accounts 2022 independent auditors’ report to the members oF
griFFin mining limited
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.
The impact of climate risk on our audit
As part of our audit, we made enquiries of management to understand their process to assess the extent of the potential impact
of climate change risks on the Group and its financial statements. We used our knowledge of the Group to consider the
completeness of the risk assessment performed by management, giving consideration to both physical and transition risks, and
management’s own reporting and announcements.
Management recognises that the changes in laws, regulations, policies, obligations and social attitudes relating to the transition
to a lower carbon economy could lead to higher costs, or reduced demand and prices for hydrocarbons, impacting the
profitability of the Group. This is a strategic risk which the Group is mitigating by working closely with regulators to ensure
that all required planning consents and permits for operations are in place and by maintaining continual dialogue with all
stakeholders to understand emerging requirements.
Whilst the impact is uncertain, we particularly considered the impact of both physical and transition risks arising due to climate
change on the recoverable value of the Group’s property, plant and equipment. We also read the disclosures made in relation
to climate change, in the other information within the Annual Report, and considered their consistency with the financial
statements and our knowledge from our audit.
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.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
$1.1 million (2021: $1.0 million).
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 $200,000 and $900,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $55,000
(2021: $50,000) 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 the assumptions used
by management and verifying that these were consistent with our existing knowledge and understanding of the business, as
well as with the Board-approved budget;
62
Griffin MininG LiMited independent auditors’ report to the members oF
griFFin mining limited
• 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
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 Group 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.
63
RepoRt and accounts 2022 independent auditors’ report to the members oF
griFFin mining limited
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.
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 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 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;
• 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.
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.
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.
Partner responsible for the audit
The engagement partner on the audit resulting in this independent auditors’ report is Timothy McAllister.
PricewaterhouseCoopers LLP
Chartered Accountants
London
9 May 2023
64
Griffin MininG LiMited Consolidated inCome statement
For the year ended 31 December 2022
(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 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
2022
$000
2
2
94,397
(56,145)
38,252
2 & 3
(22,627)
15,625
(404)
-
(387)
369
(135)
204
5,272
(7,568)
7,704
4.41
4.11
5
12
6
7
8
1
9
10
10
2021
$000
121,648
(63,224)
58,424
(21,499)
36,925
(293)
(11)
(51)
236
(404)
124
36,526
(11,150)
25,376
14.53
13.47
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
65
RepoRt and accounts 2022
Consolidated statement oF Comprehensive inCome
For the year ended 31 December 2022
(expressed in thousands US dollars)
Profit for the year
Other comprehensive income/expense that will be reclassified to profit or loss
2022
$000
2021
$000
7,704
25,376
Exchange differences on translating foreign operations
Total other comprehensive (expense)/income for the year, net of tax
(15,498)
(15,498)
3,336
3,336
Total comprehensive (expense)/income for the year
(7,794)
28,712
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
66
Griffin MininG LiMited
Consolidated statement oF FinanCial position
As at 31 December 2022
(expressed in thousands US dollars)
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets – exploration interests
Other non-current assets
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
2022
$000
2021
$000
11
12
13
14
15
16
17
18
21
22
23
24
25
24
258,041
275,296
407
1,494 -
387
259,942
275,683
8,077
3,433
34,138
45,648
4,516
2,174
38,159
44,849
305,590
320,532
1,749
69,334
3,690
168
(1,644)
2,992
(29,346)
(618)
199,140
245,465
6,317
2,649
2,717
683
12,366
47,590
169
47,759
1,749
69,334
3,690
2,072
(1,644)
2,896
(29,346)
14,635
199,190
262,576
10,352
2,667
3,240
794
17,053
40,726
177
40,903
Total equities and liabilities
305,590
320,532
Attributable net asset value per share to equity holders of parent
26
1.40
1.50
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The financial statements on pages 65 to 93 were approved by the Board of Directors and signed on its behalf by:
Mladen Ninkov
Chairman
9 May 2023
Roger Goodwin
Finance Director
67
RepoRt and accounts 2022
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t
S
d
e
t
a
d
i
l
o
s
n
o
C
e
v
o
b
a
e
h
T
Griffin MininG LiMited
Consolidated Cash Flow statement
For the year ended 31 December 2022
(expressed in thousands US dollars)
Net cash flows from operating activities
Profit before taxation
Foreign exchange losses
Finance income
Finance costs
Depreciation
Provisions against intangible assets
Losses on disposal of equipment
(Increase) / decrease in inventories
(Increase) / decrease in receivables and other current assets
(Decrease) 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 – property, plant, and equipment
Payments to acquire - office lease, 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
Purchase of shares for treasury
Bank loan advances
Repayment of bank loans
Finance lease repayments including interest
Net cash outflow from financing activities
Notes
6
7
11
12
6
11
11
12
2022
$000
15,272
387
(369)
135
19,590
-
404
(3,561)
(1,807)
(6,284)
(8,033)
15,734
369
(178)
(7,348)
(13,749)
(6) -
(20)
(20,932)
-
-
-
-
-
(167)
(167)
2021
$000
36,526
51
(236)
404
16,530
11
293
817
4,936
(2,871)
(13,581)
42,880
236
1
(13,564)
(6,365)
(73)
(19,765)
885
(309)
(727)
15,500
(15,500)
(462)
(613)
(Decrease) / increase in cash and cash equivalents
(5,365)
22,502
Cash and cash equivalents at the beginning of the year
Effects of foreign exchange rates
38,159
1,344
16,435
(778)
Cash and cash equivalents at the end of the year
16
34,138
38,159
Cash and cash equivalents comprise bank deposits.
Bank deposits
16
34,138
38,159
Included within net cash flows of $5,365,000 (2021 $22,502,000) are foreign exchange losses of $387,000 (2021 losses $51,000)
which have been treated as realised.
The above Consolidated Cash flow Statement should be read in conjunction with the accompanying notes
69
RepoRt and accounts 2022
notes to the FinanCial statements
1. basis oF aCCounting
The financial statements of Griffin Mining Limited and its subsidiaries, together “the Group”, 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 2022:
• Property, Plant and Equipment: Proceeds before Intended Use - Amendment to IAS 16;
• Onerous contracts - Cost of Fulfilling a Contract - Amendment to IAS 37;
• Annual Improvements to IFRS Standards 2018-2020; and
• Reference to the Conceptual Framework - Amendment to IFRS 3.
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 year ended 31 December 2022, 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 severe but plausible scenarios to confirm that in potential adverse 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 or other pandemic. Whilst China has experienced outbreaks of Covid-19
into 2022, strict travel restrictions, testing and quarantine requirements implemented by the PRC authorities and Griffin have
limited the impact and spread of Covid-19. As a result, apart from a suspension in operations during and in the lead up to
the winter Olympics at Chongli in the first quarter of 2022, and during the PRC National Party Congress in September and
October 2022 there have been no significant interruptions to operations at Caijiaying since the initial outbreak of Covid-19. In
the 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 three month suspension has been built into the cash flow forecasts on a severe case scenario incorporating:
• Market prices of $3,000 per tonne of zinc. Management considers this reasonable; 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.
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.
70
Griffin MininG LiMited notes to the FinanCial statements
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 judgment, management considered the Group’s voting rights, the relative size and dispersion of the voting rights
held by other shareholders and the extent of the 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 or collection basis as at this point the performance obligations are satisfied. Delivery or 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 is 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 and where adjustments are required these are
made prospectively.
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 (included in mineral interests) - 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.*
• 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.*
* included in mill and mobile mine equipment
71
RepoRt and accounts 2022 notes to the FinanCial statements
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 estimates 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:
Current market and expectations of 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 (see note 22) 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 the Statement of Other Comprehensive Income “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
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”).
72
Griffin MininG LiMited notes to the FinanCial statements
FinanCial assets (continued)
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 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 15 for further details.
Assets carried at amortised cost
For loans and receivables, the amount of a loss is 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 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”.
73
RepoRt and accounts 2022 notes to the FinanCial statements
Foreign CurrenCy transaCtions
The financial statements have been prepared in United States dollars equating to 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 company is US dollars. The functional
currency of Hebei Hua Ao is the Renminbi.
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” represents 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.
74
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 2022 the total expense recognised in profit or loss arising from share based
transactions was Nil (2021: 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, III, V and VIII 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, and in order to comply with amended PRC corporate law, 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 so that its business licence will be renewed without significant cost.
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-impairment of assets is conditional upon continued
exploration licences and permits which the directors consider will be maintained or obtained as appropriate.
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 forecast production of circa 1.5 million tonnes per
annum up to 1.6 million tonnes per annum as set out in the life of mine plan. No alterations to existing processing facilities
are required to facilitate the increase in production.
75
RepoRt and accounts 2022 notes to the FinanCial statements
signiFiCant judgements and estimates (continued)
Estimates continued
•
future zinc treatment costs.
•
future operating and capital expenditure.
• discount rates calculated using a capital asset pricing model.
Based on these estimates, the directors have determined that the Group requires the market price of zinc to be above $3,000
on an ongoing basis per tonne with gold, silver and lead prices remaining at current prevailing levels, to avoid an impairment
charge. It is also conditional upon mining licences continuing and permits being granted, which the directors consider will be
maintained or obtained as appropriate.
mine Closure Costs
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 the 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 ($10,292,000), and “Land Rehabilitation” with an estimated cost of RMB 54,566,100
($8,558,000). These amounts have been discounted over the deemed Life of Mine at a discount rate of 3.25%, being the PRC
40 year state bond rate.
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.
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
76
Griffin MininG LiMited notes to the FinanCial statements
taxation (continued)
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 in note 2, as determined by the Board, 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
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 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.
77
RepoRt and accounts 2022 notes to the FinanCial statements
2. segmental reporting
The Group has one business segment, the Caijiaying zinc gold mine in the PRC. All revenues and costs of sales in 2022 and
2021 were derived from the Caijiaying zinc gold mine.
REVENUE
China
Zinc concentrate sales
Lead and precious metals concentrate sales
Royalties and resource taxes
2022
$000
94,397
76,456
23,553
(5,612)
94,397
2021
$000
121,648
96,951
31,915
(7,218)
121,648
Whilst Griffin sells zinc concentrate and lead and precious metal concentrate by way of open auction in the PRC, 67.4%
($51,578,000) (2021: 76% $74,072,000) of zinc concentrate revenues were to a single customer with the remainder to another
single customer (2021: two) and 60.8% ($14,330,000) (2021: 89% $21,867,000) of lead and precious metal concentrate revenues
were to a single customer and the remainder to another single customer (2021: three).
COST OF SALES: CHINA
Mining costs
Haulage costs
Processing costs
Depreciation (excluding depreciation in administration expenses)
Stock movements
ADMINISTRATION EXPENSES
China
Australia
UK / Bermuda
2022
$000
16,782
10,377
14,390
17,757
(3,161)
56,145
16,136
75
6,416
22,627
2021
$000
19,003
11,466
16,754
14,481
1,520
63,224
16,433
136
4,930
21,499
Administration expenses cover the cost of managing the Group’s operations, including; payroll; office costs, including
depreciation; fees; travel; and insurance. All revenues, cost of sales and administration expenses charged to profit relate to
continuing operations and are allocated by receipt / payment location.
TOTAL ASSETS
China
Australia
UK / Bermuda
CAPITAL EXPENDITURE
China
UK / Bermuda
78
2022
$000
299,810
1,044
4,736
305,590
21,117
6
21,123
2021
$000
312,026
1,011
7,495
320,532
19,929
963
20,892
Griffin MininG LiMited
notes to the FinanCial statements
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
2022
$000
203
112
12,825
2,788
2022
No.
465
2021
$000
190
98
10,304
4,279
2021
No.
448
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
2022
Pension Total
Contributions
$000
$000
$000 $000
Fees
$000
210
186
Salary
$000
Pension
Contributions
$000
-
-
-
-
-
-
2021
Total
$000
210
186
23
219
66
-
-
-
-
-
-
-
23
556
37
812
210
431
41
682
-
-
-
-
53
53
83
295
37 1,581
- 1,911
37 3,492
-
-
91
61
781
121
902
-
-
-
-
431
1,933
2,364
-
-
-
-
41
5
46
-
-
91
61
1,253
2,059
3,312
Mladen Ninkov*
Dal Brynelsen
(resigned 5 May 2022)
Rupert Crowe
(Died 10 February 2021)
Roger Goodwin
Dean Moore
(Appointed 5 May 2022)
Linda Naylor
(Appointed 5 May 2022)
Adam Usdan
Clive Whiley
219
66
-
219
53
53
83
295
988
-
-
-
-
556
Key personnel
70
1,841
1,058
2,397
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 $3,367,000 (2021: $2,737,000), 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 the directors in 2022 or 2021. In 2021 Trellus Partners LLP, in which Adam Usdan has a
controlling interest, exercised share purchase options over 1,166,666 new ordinary shares in the Company at an exercise price
of 30 pence per share.
79
RepoRt and accounts 2022
notes to the FinanCial statements
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
9. inCome tax expense
Profit for the year before tax
Expected tax expense at a standard rate of PRC income tax of 25% (2021: 25%)
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
- In respect of other timing differences
Adjustments for permanent timing differences other
Withholding tax on intercompany dividends and charges
Current taxation expense
Deferred taxation (credit)
Origination and reversal of temporary timing differences
Total tax expense
2022
$000
404
2022
$000
369
2022
$000
-
87
48
135
2022
$000
204
2022
$000
15,272
3,818
1,054
1,862
-
291
803
7,828
(260)
(260)
7,568
2021
$000
293
2021
$000
236
2021
$000
309
84
11
404
2021
$000
124
2021
$000
36,526
9,132
934
890
(4)
372
21
11,345
(195)
(195)
11,150
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 2022 (25% in 2021) 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$128.5m (2021: $124.9m) upon which PRC withholding tax, currently 5%, may
be deducted on distribution.
80
Griffin MininG LiMited
notes to the FinanCial statements
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:
2022
Earnings Weighted Per share
amount
(cents)
Average
no of shares
$000
Earnings
$000
2021
Weighted
Average
no of shares
Per share
amount
(cents)
7,704 174,892,894
4.41
25,376
174,653,602
14.53
Basic earnings per share
Basic earnings attributable
to ordinary shareholders
Dilutive effect of securities
Options
- 12,384,576
(0.30)
-
13,730,107
Diluted earnings per share
7,704 187,277,470
4.11
25,376
188,383,709
11. property, plant and equipment
Mineral
Mill and
interests mobile mine
equipment
Offices,
furniture &
equipment
(1.06)
13.47
Total
At 1 January 2021
Foreign exchange adjustments
Transfer (note 22)
Additions during the year
Change in estimate of mine closure costs
Release of rehabilitation provision
Disposals
Depreciation charge for the year
At 31 December 2021
Foreign exchange adjustments
Transfer re rehabilitation deposit
Additions during the year
Change in mine closure costs
Disposals
Depreciation charge for the year
At 31 December 2022
At 1 January 2021
Cost
Accumulated depreciation
Net carrying amount
At 31 December 2021
Cost
Accumulated depreciation
Net carrying amount
At 31 December 2022
Cost
Accumulated depreciation
Net carrying amount
$000
214,944
3,405
(773)
13,564
327
(435)
-
(10,200)
220,832
(12,832)
(1,012)
7,348
130
-
(13,328)
$000
51,599
1,224
773
6,365
-
-
(294)
(6,180)
53,487
(4,836)
-
13,749
-
(226)
(6,104)
$000
$000
166
(2)
-
963
-
-
-
266,709
4,627
-
20,892
327
(435)
(294)
(150)
(16,530)
977
8
-
6
-
-
275,296
(17,660)
(1,012)
21,103
130
(226)
(158)
(19,590)
201,138
56,070
833
258,041
267,763
(52,819)
214,944
285,471
(64,639)
220,832
275,250
(74,112)
201,138
90,173
(38,574)
51,599
97,910
(44,423)
53,487
101,763
(45,693)
56,070
583
(417)
166
1,544
(567)
977
1,106
(273)
833
358,519
(91,810)
266,709
384,925
(109,629)
275,296
378,119
(120,078)
258,041
81
RepoRt and accounts 2022
notes to the FinanCial statements
11. property, plant and equipment (continued)
Mineral interests comprise the Group’s interest in the Caijiaying ore bodies including costs on acquisition, plus subsequent
expenditure on licences, concessions, exploration, appraisal and construction of the Caijiaying mine including expenditure
for the initial establishment of access to mineral reserves, commissioning expenditure, and direct overhead expenses prior to
commencement of commercial production and together with the end of life restoration costs.
Mill and mobile mine equipment include $14,007,000 (2021: $5,795,000) 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.
During 2013 plant and equipment with a deemed value of $11,381,000, revalued in 2019 to $14,150,000, were acquired under
a finance lease, upon which depreciation of $8,601,000 (2021: $8,132,000) has been provided. At 31 December 2022 the net
carrying amount of this equipment was $5,573,000 (2021: $7,351,000). In 2019 the London office lease was capitalised, and in
November 2021 renewed. At 31 December 2022 the net carrying amount of this office was $826,000 (2021: $963,000).
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
2022 (2021: nil). However, as best practice and in response to an updated Life of Mine Plan (“LOM”), 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 2022 by reference to the estimated mineral resources at Caijiaying
that may be extracted by 2050 (2021: 2056). While the current business licence of Hebei Hua Ao expires in 2037, Hebei
Hua Ao will be converted to an equity joint venture company with an indefinite life in order to comply with new PRC
legislation. Accordingly, a LOM has been prepared by the Company that indicates the continued extraction of ore until 2050.
In estimating the discounted future cash flows from the continuing operations at the Caijiaying mine the following principal
assumptions have been made:
• Future market prices for zinc of $3,097 (2021: $3,000) per tonne, gold of $1,800 (2021: $1,800) per troy ounce and silver
of $22.7 (2021: $22.5) per troy ounce;
• Zinc treatment charges of 30% (2021: 30%) of market prices;
• Extraction of measured and indicated resources of 40.4 million tonnes (2021: 50.3 million tonnes) to 2050 (2021: 2056)
with ore mined and processed rising to a maximum rate of 1.6 million tonnes (2021: 1.6 million tonnes) of ore per annum;
• Operating costs, recoveries and payables based upon past performance and that budgeted for 2023 and on internal
management forecast, for future years;
• Capital costs based upon that initially scheduled with sustaining capital based on future scheduling;
• Discount rate of 10% (2021: 10%);
• Continued maintenance and grant of applicable licences and permits;
• No significant impact as a result of climate change, earthquakes or other natural events; and
• A Renminbi to US dollar exchange rate of 7Rmb to $1 (2021: 6.5Rmb to $1)
Sensitivities have been considered to assess the impact of changes in key assumptions including, forecast metal prices, foreign
exchange and discount rates. If ongoing market prices for zinc fall below $3,000 per tonne, with all other assumptions
unchanged, this would result in an incremental impairment of $2.5 million. A decrease in ongoing market prices for gold of
14% with all other assumptions unchanged would result in the discounted cash flows equating to the net carrying value. An
increase in the discount rate to 11.1% with all other assumptions remaining the same, would result in the discounted cash flows
equating to the net carrying value.
82
Griffin MininG LiMited notes to the FinanCial statements
12. intangible assets - exploration interests
China – mineral exploration interests
At 1 January 2021
Additions during the year
Impairment during the year
At 31 December 2021
Additions during the year
At 31 December 2022
$000
325
73
(11)
387
20
407
Intangible assets represent cost on acquisition, plus subsequent expenditure on licences, concessions, exploration, appraisal
and development work in respect of 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.
13. China - rehabilitation deposits
At 1 January
Transfer mineral interests
Additions in period
At 31 December
14. inventories
Underground ore stocks
Surface ore stocks
Concentrate stocks
Spare parts and consumables
2022
$000
- -
1,012 -
482 -
1,494 -
2022
$000
1,076
524
2,345
4,132
8,077
2021
$000
2021
$000
603
277
123
3,513
4,516
All inventories are expected to be sold, used or consumed within one year of the balance sheet date.
The Group did not have any significant slow moving or defective inventories at 31 December 2022 (2021: nil) requiring write
off to the Income Statement.
15. reCeivables and other Current assets
Other receivables
Prepayments
2022
$000
374
3,059
3,433
2021
$000
344
1,830
2,174
Any expected credit losses on the recoverability of receivables are not expected to be material.
Prepayments include $349,000 (2021: $428,000) in respect of supplies and services for non-current assets.
83
RepoRt and accounts 2022
notes to the FinanCial statements
16. Cash and Cash equivalents
Interest bearing money market deposits
Interest bearing bank term deposit, 3 to 9 months
Bank deposit on demand
17. share Capital
AUTHORISED:
2022
$000
16,500 -
979
16,659
34,138
2021
$000
762
37,397
38,159
2022
2021
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
174,892,894
1,749
172,826,228
1,728
Shares issued in the year on exercise of share purchase options
-
-
2,066,666
21
At 31 December
174,892,894
1,749
174,892,894
1,749
No share purchase options were exercised in 2022. In 2021 share purchase options were exercised over 1,791,666 new ordinary
shares at 30 pence per share and over 275,000 new ordinary shares at 40 pence per share.
18. shares held in treasury
At 1 January
Bought back in during the year
At 31 December
2022
2021
Number
939,799
$000
1,644
-
-
Number
540,000
399,799
$000
917
727
939,799
1,644
939,799
1,644
No shares in the Company were purchased in 2022 (2021: 399,799 at average price of 132p per ordinary share).
19. share options
At 1 January
2022
Number
Surrendered
Number
At 31 December
2022
Number
Options exercisable at 30 pence per share to 31 December 2022
15,582,500
(13,920,000)
1,662,500
Options exercisable at 40 pence per share to 31 December 2022
4,518,333
(3,600,000)
918,333
20,100,833
(17,520,000)
2,580,833
No share purchase options were exercised in 2022 (2021: 1,791,666 at 30 pence per share and 275,000 at 40 pence per share).
84
Griffin MininG LiMited
notes to the FinanCial statements
19. share options (continued)
As part of a rationalisation of the capital structure of the Company, an offer was made on 30 December 2022 to option holders
for the purchase and cancellation of outstanding options over 19,520,000 shares in the Company (“the Offer”). Acceptances
have been received from option holders in respect of options to purchase 17,520,000 shares in the Company which have
subsequently been purchased and cancelled (note 25). $9,317,000 has been provided and charged directly to reserves in respect
of this cancellation against which share based option provisions of $1,904,000 have been released.
The following table shows the number and weighted average exercise price of all the unexercised share options and warrants
at the year end:
2022
2021
Number Weighted average
exercise price
Pence
Number Weighted average
exercise price
Pence
Outstanding at 1 January
20,100,833
Surrendered / Exercised during the year
(17,520,000)
Outstanding at 31 December
2,580,833
32.2
32.05
33.7
22,167,499
(2,066,666)
20,100,833
32.2
(31.3)
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 (2021 $nil) during the year ended 31 December 2022 relating to equity settled
share option scheme transactions.
20. dividends
No dividends were paid in 2022 (2021: nil).
21. other payables
PRC licence fees
2022
$000
6,317
2021
$000
10,352
85
RepoRt and accounts 2022
notes to the FinanCial statements
22. long-term provisions
PROVISIONS FOR MINE CLOSURE COSTS
At 1 January
Change in estimate (note 11)
Interest charges
Foreign exchange adjustments
At 31 December
2022
$000
2,667
130
86
(234)
2,649
2021
$000
2,200
327
84
56
2,667
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 ($10,292,000), and “Land Rehabilitation” with an estimated cost of RMB 54,566,100
($8,558,000). These amounts have been discounted over the deemed Life of Mine at a discount rate of 3.25% (2021: 3.39%),
being the PRC 40 year state bond rate.
23. deFerred taxation
At 1 January
Foreign exchange adjustments
(Credit) for the year
At 31 December
2022
$000
3,240
(263)
(260)
2,717
2021
$000
3,359
76
(195)
3,240
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.
24. lease liabilities
At 1 January
Foreign exchange adjustments
Advance during the year
Interest charges
Repayments in the year
At 31 December
Amounts falling due in more than one year
Amounts falling due within one year
2022
$000
971
-
-
48
(167)
852
683
169
852
2021
$000
383
76
963
11
(462)
971
794
177
971
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 asset 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. This
lease was renewed in October 2021 with a deemed value of $1,581,000 discounted using an incremental borrowing rate of 5%
upon which depreciation of $755,000 (2021: $618,000) has been provided.
86
Griffin MininG LiMited
notes to the FinanCial statements
24. lease liabilities (continued)
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
25. trade and other payables
Trade creditors
Other creditors
Business taxation payable
Zhangjiakou Yuanrun Enterprise Management Consulting Service Co., Ltd (note 32)
Accrual for shares to be issued upon surrender of options (note 19)
Accruals
2022
$000
151
151
151
151
151
151
906
2022
$000
17,010
8,943
2,680
3,237
9,317 -
6,403
47,590
2021
$000
177
169
169
169
169
338
1,191
2021
$000
19,358
6,174
2,884
5,638
6,672
40,726
$9,317,000 has been accrued for 10,130,526 new ordinary shares in the Company at 76 pence per share being issued as part of
a rationalisation of the capital structure of the Company. An offer was made on 30 December 2022 to option holders for the
purchase and cancellation of outstanding options over 19,520,000 shares in the Company (“the Offer”). Acceptances have been
received from option holders in respect of options to purchase 17,520,000 shares in the Company which have subsequently
been purchased and cancelled, which based on the mid-market price on the Offer date of 76 pence per share have resulted in
10,130,526 new ordinary shares being issued pursuant to the Offer for nil consideration.
All amounts are short term. The carrying values of all trade and other payables are considered to be a reasonable approximation
of fair value.
26. 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 2022 of $245,465,000 ($262,576,000 at 31 December 2021) divided by the number of ordinary shares
in issue at 31 December 2022 of 174,892,894 (174,892,894 at 31 December 2021).
27. 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
cash flows for the foreseeable future.
87
RepoRt and accounts 2022
notes to the FinanCial statements
27. 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 local 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
2022
$000
318
Australian dollar bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2022
$000
1,037
Renminbi bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2022
$000
13,993
2021
$000
518
2021
$000
983
2021
$000
30,477
The following table illustrates the sensitivity of the net results for the year and equity with regards to the Group’s Renminbi
deposits and the Renminbi US Dollar exchange rate. It assumes a + / - 10% (2021: 10%) change in the Renminbi exchange
rate for the year ended 31 December 2022. These changes are considered to be reasonable based on observation of current
market conditions for the year ended 31 December 2022. The sensitivity analysis is based upon the Group’s Renminbi deposits
at each reporting date.
If the Renminbi had strengthened against the US Dollar by 10% (2021: 10%) this would have had the following impact:
Net result for the year and on equity
2022
$000
1,555
If the Renminbi had weakened against the US Dollar by 10% (2021: 10%) this would have the following impact:
Net result for the year and on equity
2022
$000
(1,272)
2021
$000
3,387
2021
$000
(2,771)
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.
88
Griffin MininG LiMited
notes to the FinanCial statements
27. risk management (continued)
Foreign Currency Risk (continued)
With relatively small amounts held in Sterling, Australian dollars, and Hong Kong dollars the effect on the net results and
equity of changes in Renminbi and Australian dollar exchange rates are not expected to be significant.
Foreign currency denominated financial assets and liabilities, translated into US Dollars at the closing rate, are as follows:
2022
Rmb
$000
AusD
$000
GBP
$000
2021
Rmb
$000
AusD
$000
GBP
$000
609
17,128
1,043
729
32,804
1,000
(1,254)
(38,193)
(24)
(1,300)
(42,189)
(645)
(21,065)
1,019
(571)
(9,385)
(37)
963
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 + 100% and - 100% (2021 + 100% - 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
2022
2021
Plus 100% Minus 100%
Plus 100% Minus 100%
$000
369
$000
(369)
$000
236
$000
(236)
Fixed and non interest bearing financial assets and liabilities are as follows:
2022
2021
interest rate
Fixed Non interest
bearing
Total
Restated
Fixed Non interest
bearing
interest rate
Total
$000
$000
$000
$000
$000
$000
Financial assets
Cash at bank
Other receivables
Total Financial Assets
Finance lease liabilities
Trade and other payables
Total Financial Liabilities
17,479
-
17,479
(852)
-
(852)
16,659
374
17,033
34,138
374
34,512
-
(41,910)
(41,910)
(852)
(41,910)
42,762)
Net Financial assets / (liabilities)
16,627
(24,877)
(8,250)
Commodity risk
762
-
762
(971)
-
(971)
(209)
37,397
344
37,741
38,159
344
38,503
-
(48,193)
(48,193)
(971)
(48,193)
(49,164)
(10,452)
(10,661)
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 2022 or in 2021.
Cash at bank in 2021 has been restated from floating rates to non interest bearing and fixed interest rate.
89
RepoRt and accounts 2022
notes to the FinanCial statements
27. 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 of plus 30% and minus 30%, gold of plus 10% and minus 10% and silver of plus 20% and minus 20%
(2021: 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
2022
Plus
$000
Minus
$000
2021
Plus
$000
Minus
$000
16,169
(16,169)
20,504
(20,504)
1,341
(1,341)
1,794
(1,794)
584
(584)
786
(786)
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 2022 the Group held cash and cash equivalents (bank deposits) with high
credit financial institutions of $34,138,000 (2021: $38,159,000) to meet financial obligations and apart from lease, trade and
other payables had no bank loans or similar financial liabilities.
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.
28. 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 $245,465,000 at 31 December 2022.
90
Griffin MininG LiMited
notes to the FinanCial statements
29. 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, Australian Dollar 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, Australian Dollar 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:
2022
$000
34,138
10,328
32,434
42,762
2021
$000
38,159
14,774
34,391
49,165
At 31 December 2021
Within
1 year
$000
Between 1
and 2 years
Between 2
and 3 years
$000
$000
Over
3 years
$000
Total contractual Carrying amount
(assets)/liabilities
cash flows
$000
$000
Non-derivatives
Trade payables
Lease liabilities
37,841
177
3,451
169
3,451
169
3,450
676
48,193
1,191
Total non-derivatives
38,018
3,620
3,620
4,126
49,384
48,193
971
49,164
At 31 December 2022
Non-derivatives
Trade payables
Lease liabilities
Total non-derivatives
Derivatives
Within
1 year
$000
Between 1
and 2 years
Between 2
and 3 years
$000
$000
Over
3 years
$000
Total contractual Carrying amount
(assets)/liabilities
cash flows
$000
$000
35,592
151
35,743
-
3,159
151
3,310
-
3,159
151
3,310
-
-
453
453
-
41,910
906
42,816
-
41,910
852
42,762
-
91
RepoRt and accounts 2022
notes to the FinanCial statements
30. subsidiary Companies
At 31 December 2021, 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 and service 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 Ltd) 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 $2,399,000 (2021 $3,876,000) are included in net operating costs
rather than attributable to non-controlling interests. Likewise, the amounts due at 31 December 2022 of $3,237,000 (2021:
$5,638,000) are included in other payables rather than due to non-controlling interests within equity within the Consolidated
Statement of Financial Position.
31. Commitments
At 31 December 2022 the Group had capital commitments in respect of mine development plant and equipment of $824,000
(31 December 2021: $1,144,000).
32. 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 $3,367,000 (2021: $2,737,000), 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 $2,788,000 was charged (2021: $4,279,000) 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 2022 $3,237,000 (2021: $5,638,000) was due to this company.
92
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notes to the FinanCial statements
33. post balanCe sheet events
As a rationalisation of the capital structure of the Company, on 30 January 2023 10,130,526 new ordinary shares in the
Company were issued for nil consideration pursuant to the offer to holders of share purchase options for the purchase and
cancellation of outstanding options over 17,520,000 shares in the Company which have subsequently been purchased and
cancelled (note 19 and 25).
On 4 April 2023 a further 7,805,000 new ordinary shares in the Company were issued as an incentive and to retain the services
of officers and other personnel of the Company, including 6,000,000 for the benefit of Mladen Ninkov, Chairman. These new
ordinary shares have been issued subject to agreements between each of the said persons and the Company to confirm that
the shares issued will not be sold or otherwise transferred or disposed before 31 December 2024 or earlier in the event of a
transaction, subject to malus, and a pro rata repurchase option in favour of the Company if any holder of these shares leaves
before 31 December 2024.
At 31 December 2022 there were no adjusting post balance sheet events (2021: none).
93
RepoRt and accounts 2022 94
Griffin MininG LiMited Personnel at the Caijiaying Mine
95
RepoRt and accounts 2022 Corporate inFormation: griFFin mining limited
Registered office:
Clarendon House, 2 Church Street, Hamilton. HM11, Bermuda
London Office:
Perth Office:
8th Floor, Royal Trust House, 54 Jermyn Street, London, SW1Y 6LX, UK
Telephone: + 44 (0)20 7629 7772 / Facsimile: + 44 (0)20 7629 7773
Email: griffin@griffinmining.com / Web site: www.griffinmining.com
Level 7, BGC Centre, 28 The Esplanade, Perth, WA 6000, Australia
Telephone: + 61(0)8 9321 7143 / Facsimile: + 61 (0)8 9321 7035
Hong Kong Office:
18/F, Wai Wah Commercial Centre, 6 Wilmer Street, Sheung Wan, Hong Kong
Directors:
Mladen Ninkov (Chairman)
Roger Goodwin (Finance Director)
Dean Moore
Linda Naylor
Adam Usdan
Clive Whiley
Company Secretary:
Roger Goodwin
Nominated Adviser
and Broker for AIM:
Joint Broker:
Panmure Gordon (UK) Limited
40 Gracechurch Street, London, EC3V 0BT, UK
Joh. Berenberg, Gossler & Co. KG
60 Threadneedle Street, London, United Kingdom, EC2R 8HP
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 & 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 Main Building, 1 Queen’s Road Central, Hong Kong
HSBC Bank of Bermuda Ltd
6 Front Street, Hamilton, HM11, Bermuda
UK Registrars
and Transfer Agents:
Link Market Services (Jersey) Limited
12 Castle Street, St Helier, Jersey, JE2 3RT. UK
96
Griffin MininG LiMited