Contents
Chairman’s statement
Overview
Caijiaying
IntroductIon
development
mIneral resource estImates
GeoloGy
exploratIon
operatIons
FinanCial results
sustainability, envirOnment and lOCal COmmunity
strategiC review
overvIew
caIjIayInG mIne
acquIsItIons and Further projects
clImate chanGe
COrpOrate gOvernanCe
stakeholder enGaGement
report oF the audIt commIttee
report oF the remuneratIon commIttee
direCtOrs - griFFin mining ltd
subsidiary 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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104
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 website: 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 2023
Contents
Chairman’s statement
Overview
Caijiaying
IntroductIon
development
mIneral resource estImates
GeoloGy
exploratIon
operatIons
FinanCial results
sustainability, envirOnment and lOCal COmmunity
strategiC review
overvIew
caIjIayInG mIne
acquIsItIons and Further projects
clImate chanGe
COrpOrate gOvernanCe
stakeholder enGaGement
report oF the audIt commIttee
report oF the remuneratIon commIttee
direCtOrs - griFFin mining ltd
subsidiary direCtOrs and seniOr exeCutives
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
4
8
8
8
8
10
18
18
22
26
29
47
47
47
47
47
48
50
51
53
56
57
60
66
73
74
75
76
77
78
104
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 website: 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 2023
2
Griffin MininG LiMited Caijiaying Mine operational facilities - Summer 2024
3
RepoRt and accounts 2023 Chairman’s statement
Understanding full well that I am breaking one of the
• Silver in concentrate produced was up 40.1% to 314,677
paramount 7 deadly sins, it gives me an enormous sense of
ounces; and
pride and satisfaction to present to you, the shareholders
and owners of Griffin Mining Limited (“Griffin” or the
“Company”), the Annual Report and Accounts of the
Company for the 2023 calendar and financial year (the
“Annual Report”). 2023 proves, beyond any reasonable
doubt, that the founding directors of the Company
have been proven correct. Contrary to all the naysayers
throughout the long years, the Company has established
a world class, environmentally friendly mining operation,
developed and operated in the People’s Republic of China
(“PRC” or “China”), on a self-generating cash flow basis,
without seeking continual capital from shareholders or
• Lead in concentrate produced was up 64.5% to 1,546
tonnes.
These results are all the more impressive in light of the
fact that no ore is yet being delivered from Zone II, which
remains under full speed development. Underground
workings, services and the 3rd Portal all remain under
construction and near completion. Grade control drilling
continues unabated and the South Ventilation Shaft has
been sunk almost 250 metres. Ore extraction from Zone II
remains on schedule for the 1st Quarter of 2025.
incurring debt. Put simply, in the words of Helen Keller,
Drilling continues in both Zones II and III with a record
“While they were saying it couldn’t be done, it was done.”
7 diamond drill rigs in continual operation. This number
It is hard to know where to start, the news is so
overwhelmingly positive and we are just at the start of the
Year of the Dragon!
Financially, record revenues were generated in 2023. The
Company and its subsidiaries (together the “Group”)
recorded;
of operating rigs is yet another record for the Caijiaying
Mine. With the volume and quality of the drilling
information being produced, it is our expectation that a
new JORC resource will be announced in 2024.
With continuing operational and financial success, it is easy
to become complacent and fail to deal with non-financial
issues which impact the future viability of the Company.
• Revenues up 54.7% at $146,023,000;
As such, the Company strives to be a fully responsible
• Gross profit up 35.5% at $51,842,000;
• EBIT up 47.3% at $51,863,000;
• Operating profit up 52.5% at $23,837,000;
• Profit before tax up 60.3% at $24,486,000;
corporate citizen to all our relevant stakeholders,
including our shareholders, employees, contractors, the
people of China and the global environment. As such, the
Company has committed itself to the generation and use
of 100% renewable energy in the next 12 months, one
third of which is already generated via the solar farm at
• Profit after tax up 97.8% at $15,236,000; and
the Caijiaying Mine. A further two 6.3MW wind turbines
• Basic earnings per share up 82.1% at 8.03 cents.
generating a total of 12.6MW of wind power will be
constructed within 2.5km of the Caijiaying Mine. Once
Operationally, a record amount of ore was mined, hauled
completed, the Caijiaying Mine will have 18.6MW of
and processed, with throughput reaching mill design
renewable electrical capacity at peak generation which
capacity of 1.5 million tonnes per annum. This led, inter
exceeds the current 18.1MW peak usage. The Company is
alia, to record zinc metal production:
• Ore mined was up 76.6% to 1,505,642 tonnes (all from
Zone III):
• Ore processed was up 82.1% to 1,513,977 tonnes:
• Zinc metal in concentrate produced was up 79.1% to
56,933 tonnes;
• Gold in concentrate produced was up 68.2% to 17,052
ounces;
currently examining the installation of large-scale battery
storage capacity and the purchase of wind or solar energy
directly from state owned renewable energy projects in
close proximity to the Caijiaying Mine to achieve 100%
renewable power at all times regardless of light or wind
conditions. I know of no other active mine or operations
that can claim to have fully committed to the switch to
100% renewable energy and already be generating a third
of its energy from its solar farm.
4
Griffin MininG LiMited Inevitably the question then arises how to deal with the
I should mention that this year marks the 30th anniversary
excess cash being generated by operations. It was decided
of Hebei Hua Ao Mining Industry Co Ltd (“Hebei Hua
by the directors of the Company not only to continue with
Ao”), the foreign joint venture stock company formed
the on-market share buy-back scheme operated by the
in 1994 to hold the interest in the Caijiaying Mine, the
Company’s Nominated Advisor, Panmure Gordon, but
majority interest of which was acquired by Griffin almost
to also undertake an offer for larger blocks of stock held
4 years later in 1997/8. Nevertheless, celebrations marking
by institutional shareholders through the Company’s joint
the occasion will be held in China later this year. It is my
broker, Berenbergs. As such, well over 10 million shares
absolute hope that at these celebrations there will also be
were acquired and then cancelled by the 26 February 2024
an announcement of Hebei Hua Ao converting its legal
at a substantially lower share price than currently quoted.
status to a limited liability company, as mandated in the
It is expected both methods of buying back the Company’s
PRC Foreign Investment Law (Article 42), bringing all the
stock will continue in 2024, reducing the Company’s
benefits of that legal structure to the parties involved.
shares outstanding and improving the Company’s earnings
per share. To this end, and although I rarely comment on
the Company’s share price, it has been pleasing to see the
market finally seemingly begin to understand the inherent
value of the Company and even perhaps the parlous state
of the world mining environment.
All that remains for me to conclude is that the old adage
remains as true today as when it was written so long ago by
Tacitus and re-imagined by John F Kennedy, “Success has
many fathers, but failure is an orphan.” An operation of the
size, complexity and in the location of the Caijiaying Mine,
has depended on, and will continue to depend on, the
In that vein, I believe it appropriate to mention the very
intelligence, expertise, dedication, discipline and sacrifice
recent indicative proposal announcement by BHP in
of a large number of individuals. I can’t and won’t name
relation to Anglo-American, an attempt by BHP to acquire
them as to do so would inevitably exclude someone who
scarce copper assets. Although this may be a surprise to
has deserved to be in that pantheon of champions. Suffice
the market, it is a logical progression of the failure of the
it to say I regularly refer to some current success which
capital markets to support the mining industry, and in
rests either on our founding directors’ feet, our current
particular the junior miners, who overwhelmingly discover
operational staff and/or our relatively new directors. All
the orebodies needed to supply the world with the raw
have played or continue to play their vital part and we owe
products needed for human existence. We have just begun
them our sincerest thanks. It needs to be understood by all
to feel the effects of having rare resources and its expression
involved that what they all do is beyond the responsibilities
in rising commodity prices. As Mark Burton at Bloomberg
of ordinary corporate employment and it deserves our
wrote recently, “A successful takeover would make BHP
acknowledgment.
the biggest copper producer with about 10% of the
market, but it won’t make any difference toward meeting
the world’s supply needs. Production from existing mines
is set to fall sharply in the coming years, and miners would
need to spend more than $150 billion between 2025
and 2032 in order to fulfill the industry’s supply needs,
according to CRU Group. One key challenge is that new
mines take years and often decades to build, ‘There is a
clear and compelling need for additional mine capacity
to be brought online,’ said William Tankard, principal
analyst for base metals at CRU. ‘The gauntlet is being
laid down at the feet of the miners, and it’s going to be
exceptionally challenging to deliver.”
Lastly, and always most importantly, thank you to you,
the shareholders and owners of the Company. Everyone
can “talk the talk” but few can “walk the walk.” It is
your capital, patience and continued support which
allows the Company to have the stability and confidence
to continue to move forward at an ever quicker pace.
We will continue to honour the commitment you have
all made by moving heaven and earth to give you the
returns you so richly deserve.
Mladen Ninkov
Chairman
14 May 2024
5
RepoRt and accounts 2023 6
Griffin MininG LiMited Hebei Hua Ao morning Management Meeting at the Caijiaying Mine
7
RepoRt and accounts 2023 overview
Griffin Mining Limited (“Griffin” or “the Company”)
The Caijiaying Mine currently produces zinc, gold, silver
is a mining and investment company, incorporated in
and lead in concentrate.
Bermuda in 1988. Its shares have been trading on the
Alternative Investment Market of the London Stock
Exchange (“AIM”) since 1997.
The Company also holds a 90% interest in Hebei Sino
Anglo Mining Development Company Limited (“Hebei
Anglo”), which has interests in exploration licences
The major asset of the Company is an 88.8% interest
immediately surrounding the Hebei Hua Ao licence
in Hebei Hua Ao Mining Industry Company Limited
area. These tenements are currently held by Hebei
(“Hebei Hua Ao”) through its wholly-owned Hong Kong
Anglo’s joint venture partner, Zhangjiakou Yuanrun
subsidiary, China Zinc Limited (“China Zinc”). Hebei
Enterprise Management Consulting Service Co., Limited
Hua Ao holds all the necessary licences, the operating
(“Yuanrun”), thereby allowing their retention under PRC
mine and processing facilities (the “Caijiaying Mine”)
law within the Hebei Anglo Group. Hebei Anglo has
located near Zhangjiakou City in the People’s Republic of
a contractual option to have these exploration licences
China (“PRC” or “China”).
transferred at any time back to Hebei Anglo.
The Company has held its interest in Hebei Hua Ao
The Company continues to aggressively explore, expand
since 1997 having financed, explored and managed the
and develop the Caijiaying Mine whilst also investigating
development of the Caijiaying Mine from the discovery
potential acquisitions of mining projects that are capable,
of economic mineralisation to the current extraction and
through either advanced exploration or mining expertise,
processing of circa 1.5 million tonnes of ore per annum.
of being brought into production to meet the Company’s
historically pre-set, economic returns to shareholders.
Caijiaying
INTRODUCTION
DEVELOPMENT
The Caijiaying Mine is an operating zinc, gold, silver,
Hebei Hua Ao is a contractual co-operative joint venture
and lead mine, together with processing plant, camp and
company established in 1994 under PRC law. Initially,
supporting facilities, located approximately 250 kilometres
Griffin held 60% of Hebei Hua Ao (through its wholly
by road, north-west of Beijing in the Hebei Province of the
owned subsidiary China Zinc), with the remaining 40% held
PRC. The Caijiaying Mine is easily accessible by freeway
by Yuanrun, the shareholders of which are the Zhangjiakou
from Beijing. The site has significant water supplies, an on
City People’s Government and the Third Geological
site solar farm together with two 35,000 volt power lines
Brigade of Hebei Province (the “Third Brigade”).
connected to the electricity grid, full connectivity to fixed
and mobile telecommunications systems and broadband
access for internet services. It is 63 kilometres from
Chongli, the closest station on the high speed train link
with Beijing.
The initial operating term of Hebei Hua Ao was 25 years
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
There are a number of zones of mineralisation within the
from Yuanrun in 2012. Griffin now holds an 88.8% equity
tenements held by Hebei Hua Ao at the Caijiaying Mine
interest in Hebei Hua Ao and Yuanrun retains an 11.2%
including Zone III, which is currently being mined, and
residual interest. This interest is compensated via a service
Zone II, being developed for production in 2025.
contract (for accounting purposes) for services rendered,
Climatic conditions are relatively mild with warm summers
and cold winters, enabling the Caijiaying Mine to operate
throughout the year.
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.
8
Griffin MininG LiMited Geographic location of the Caijiaying Mine, People’s Republic of China
9
RepoRt and accounts 2023 Caijiaying (continued)
On 1 January 2020 a new PRC Foreign Investment Law
development efforts focusing on accessing the Zone II
was enabled which repealed the Sino Foreign Joint Venture
resource while maintaining mine production at Zone III.
Law. Pursuant to Article 42, all Joint Ventures established
under the previous law must be converted into limited
liability companies by 1 January 2025 with a new business
licence. This will require, inter alia, the adoption of new
Articles of Association which will have significant benefits
for the Company including the inevitable exclusion of
the termination of the current joint venture in 2037 as a
limited liability company, and a new business licence.
In January 2004, a second contractual joint venture
company, Hebei Anglo, was formed to hold the mineral
rights to the area surrounding the original Hebei Hua
Ao licence area and any other areas of interest in Hebei
Province. Griffin, through its wholly owned UK subsidiary
Panda Resources Limited (“Panda”), has a 90% interest
in Hebei Anglo whilst Yuanrun holds 10%. As Griffin
investigates other areas of interest and projects in China,
Hebei Anglo may be used to invest in any such projects.
The Caijiaying Mine was commissioned on time and on
budget in 2005. Numerous upgrades to the Caijiaying
Mine have taken place since commissioning leading to the
current mill throughput capacity of 1.5 million tonnes of
ore per annum. Mining rates solely from Zone III have
now reached the equivalent of 1.5 million tonnes of ore
per annum. The development of Zone II at the Caijiaying
Mine, now being undertaken, will enable current and
possibly higher production rates in the future.
To date Griffin has invested some $400 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
generated funds.
Mineral resources at the Caijiaying Mine are organized
into four zones. From south to north, the main line of lodes
comprise mineral resources from Zones II, III and VIII,
while Zone V sits just 1km west of Zone II. Underground
mine production began at Zone III in 2005, consistently
delivering robust production levels and achieving record
production in 2023.
The Global Mineral Resource that encompasses the
entire area totals, 83.1 million tonnes at 3.9% Zn, 0.6%
Pb, 29.4g/t Ag and 0.4g/t Au resulting in total contained
metal of approximately 3.24 million tonnes of Zn, 0.5
million tonnes of Pb, 78.4 million ounces of Ag and 1.13
million ounces of Au. This applies a zinc cut-off grade of
1% and is amended for mining depletion at Zone III as of
31 December 2023.
In 2023, an extensive underground diamond drill program
covering Zone II and III achieved a total amount drilled
of 50,915 metres. The primary aim of this ongoing
campaign is to reduce operational risks and enhance
resource confidence during the transition to Zone II.
Simultaneously, it seeks to uncover new opportunities in
areas adjacent to the mined zones in Zone III and evaluate
potential targets inferred to the east of the mine.
Zone III
The updated 2023 Mineral Resource Estimate at Zone
III at a zinc cut-off grade of 1% using actual drilling as
of July 2023 and amended for mining depletion up to 31
December 2023 totals 32.1 million tonnes at 4.6% Zn,
0.2% Pb, 24.9g/t Ag and 0.6g/t Au. This results in total
metal of approximately 1.5 million tonnes of Zn, 0.08
With the grant of a new mining licence in December
million tonnes of Pb, 25.7 million ounces of Ag and 0.6
2020 over the combined Zone II and Zone III areas, and
million ounces of Au.
consequent approval of a mine design for the new Zone
II area, the development of Zone II is well underway.
Production from Zone II is expected in 2025. This will
allow sustained production of at least 1.5 million tonnes of
ore per annum to be extracted from the Caijiaying Mine
for the extent of its current resource base, if not longer.
MINERAL RESOURCE ESTIMATES
Mining operations at Caijiaying have embarked on
an exciting phase of expansion with ongoing mine
The Zone III Mineral Resource Estimate is defined by a total
of 189 surface diamond drill holes, 32 reverse circulation
surface drill holes and 4,801 underground diamond drill
holes with an average spacing of approximately 20 metre x
20 metre, for a combined total of 633,940 metres of drilling.
Underground mining operations at Zone III have achieved
full development from 1,420mRL down to the lower mine
licence boundary at the 1,000mRL. Production activities
persist across all levels of operation, employing integrated
primary, secondary and remnant production fronts.
10
Griffin MininG LiMited Concurrently, exploration and resource diamond drilling
at 6.8 million tonnes at 4.0% Zn, 0.7% Pb, 37.0g/t Ag and
efforts focus on delineating near-mine mineralisation
0.7g/t Au. This estimation translates to approximately
beneath and eastward of mine development. In total,
0.3 million tonnes of Zn, 0.05 million tonnes of Pb,
198 underground drill holes, spanning 25,981 meters,
8.1 million ounces of Ag and 0.16 million ounces of
were drilled to facilitate both grade control and resource
Au. The Zone VIII deposit is defined by a total of 44
definition objectives throughout 2023.
diamond drillholes spaced at intervals of 50 to 100 metres
amounting to a combined total of 32,193 metres. Zone V
and VIII are situated within a mining retention licence
adjacent to Zone II and III, covering a total area of 2.23
square kilometres and valid until the 16 July 2024. The
Company is currently seeking to convert the retention
licence to a mining licence.
Mineral Resource Estimate
The Global Mineral Resource that encompasses Zones III,
II, V and VIII at a zinc cut-off grade of 1% and as amended
for mining depletion at Zone III as of 31 December 2023 is
summarised as follows.
Zone II
The updated 2023 Zone II Mineral Resource Estimate at
a zinc cut-off grade of 1% using actual drilling as of July
2023 totals 38.2 million tonnes at 3.4% Zn, 0.9% Pb,
27.5g/t Ag and 0.2g/t Au. This results in total metal of
approximately 1.3 million tonnes of Zn, 0.3 million tonnes
of Pb, 33.8 million ounces of Ag and 0.26 million ounces
of Au.
A total of 109 surface diamond drillholes, 91 reverse
circulation surface drillholes and 261 underground
diamond drillholes, define the Zone II deposit at an
average spacing of approximately 40 metre x 40 metre for a
combined total of 116,317 metres of drilling.
Five primary levels of capital development are under
construction
and, once
completed, will provide
comprehensive drill access to the entire 1.3 kilometre
strike length of the Zone II Mineral Resource, extending
to the lower designed level of 1030RL. Furthermore,
extensive diamond drilling from the historic Zone II 1453
RL drill drive continues to delineate and define mineral
resources with 98 underground diamond drill holes for
24,934 meters completed in 2023.
Zone V
There has been no on ground activity at Zone V
throughout 2023 and therefore the Mineral Resource
Estimate remains unchanged at 6.0 million tonnes at 3.2%
Zn, 1.4% Pb, 56.0g/t Ag and 0.6g/t Au. This estimation
yields approximately 0.2 million tonnes of Zn, 0.08 million
tonnes of Pb, 10.8 million ounces of Ag and 0.12 million
ounces of Au. The deposit at Zone V is defined by a total of
34 surface diamond drillholes, 3 reverse circulation surface
drillholes with an average spacing of approximately 25
metre x 100 metres for a combined total of 15,242 metres
of historical drilling.
Zone VIII
There was no on-ground activity at Zone VIII in 2023,
and, therefore, the mineral resource remains unchanged
11
RepoRt and accounts 2023 12
Griffin MininG LiMited Plan view of Zones II, III, V & VIII with surrounding licence areas
13
RepoRt and accounts 2023 Caijiaying (continued)
MINERAL RESOURCE ESTIMATES
Caijiaying Zone III Remaining Mineral Resources
Zone III Domain 1: Zn Resources > 1% Zn
Tonnes
(Mt)
22.1
5.8
3.5
31.4
Zn
(%)
5.0
3.7
4.2
4.7
Pb
(%)
0.3
0.2
0.3
0.2
Ag
(g/t)
25.2
21.4
30.6
25.1
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
0.6
0.4
0.3
0.5
1,104
216
149
1,469
56
11
9
76
17,902
3,951
3,494
25,346
455
67
34
556
Zone III Domain 2: Au Resources > 0.5 g/t Au
Tonnes
(Mt)
0.6
0.1
0.0
0.7
Tonnes
(Mt)
22.7
5.9
3.6
32.1
Tonnes
(Mt)
1.6
1.2
2.8
4.3
11.8
19.3
35.4
4.3
13.4
20.5
38.2
Zn
(%)
0.5
0.7
0.8
0.5
Zn
(%)
4.9
3.7
4
4.6
Zn
(%)
2.5
2.0
2.3
3.9
3.9
3.2
3.5
3.9
3.7
3.1
3.4
Pb
(%)
0.1
0.0
0.1
0.1
Pb
(%)
0.2
0.2
0.3
0.2
Ag
(g/t)
17.2
9.6
7.7
15.9
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
2.2
0.9
0.7
2.0
3
1
0.1
4
0.5
0.04
0.01
1
323
32
2
357
42
3
0.2
46
Zone III: Total
Ag
(g/t)
25.0
21.2
30.6
24.9
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
0.7
0.4
0.3
0.6
1,107
216
150
1,472
57
11
9
76
18,225
3,983
3,496
25,704
497
70
35
601
Caijiaying Zone II Mineral Resources
Zone II Oxide: Zn Resources > 1% Zn
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
Pb
(%)
0.5
0.2
0.4
Ag
(g/t)
20.2
9.4
15.6
Au
(g/t)
0.2
0.1
0.2
39
24
63
Zone II Fresh: Zn Resources > 1% Zn
1.4
0.7
0.9
0.9
1.4
0.7
0.8
0.9
32.9
21.3
31.9
28.5
0.3
0.2
0.2
0.2
168
455
611
1,234
Zone II Total
32.9
21.2
30.6
27.5
0.3
0.2
0.2
0.2
168
494
635
1,297
8
3
11
60
84
170
313
60
92
173
325
1,025
360
1,386
4,520
8,108
19,779
32,407
4,520
9,134
20,139
33,793
12
4
17
45
72
123
240
45
84
127
256
Category
Measured
Indicated
Inferred
Sub-Total
Category
Measured
Indicated
Inferred
Sub-Total
Category
Measured
Indicated
Inferred
Total
Category
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Total
14
Griffin MininG LiMited
Caijiaying Zone V Mineral Resources
Zone V Zn Resources > 1% Zn
Category
Inferred
Total
Tonnes
(Mt)
6.0
6.0
Zn
(%)
3.2
3.2
Pb
(%)
1.4
1.4
Ag
(g/t)
56.0
56.0
Au
(g/t)
0.6
0.6
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(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
Sub-Total
Tonnes
(Mt)
6.1
6.1
Zn
(%)
4.4
4.4
Pb
(%)
0.7
0.7
Ag
(g/t)
36.0
36.0
Au
(g/t)
0.5
0.5
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(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
Category
Inferred
Sub-Total
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
Category
Inferred
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
4.0
4.0
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 31 December 2023
Category
Measured
Indicated
Inferred
Total
Tonnes
(Mt)
27.0
19.3
36.8
83.1
Zn
(%)
4.7
3.7
3.4
3.9
Pb
(%)
0.4
0.5
0.8
0.6
Ag
(g/t)
26.2
21.2
35.9
29.4
Au
(g/t)
Zn Metal
(kt)
Pb Metal
(kt)
Ag Metal
(kOz)
Au Metal
(kOz)
0.6
0.2
0.4
0.4
1,274
711
1,252
3,237
117
103
312
531
22,745
13,116
42,578
78,440
542
154
438
1,134
Notes: The Caijiaying Mineral Resources are based on resource modelling work completed by ERM Australia Consultants Pty Limited (previously
CSA Global) and reported in 2023 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 Fellow of The Australasian Institute
of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Dr. Maxim Seredkin is a full-time employee of ERM
Australia Consultants Pty Limited. 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.
15
RepoRt and accounts 2023
16
Griffin MininG LiMited Long section view orientated west of the Zone III Mineral Resource, Wireframes are indicated in red
and underground development and stoping are indicated in blue.
17
RepoRt and accounts 2023 Caijiaying (continued)
GEOLOGY
EXPLORATION
The Caijiaying Mine is located at the northern margin of
the North China Craton in the Yanshan Metallogenic Belt
Hebei Hua Ao Mining Area
within Hebei Province of China. This prolific metallogenic
Exploration at Caijiaying continues to be an important
belt stretching east-west for hundreds of kilometres
part of the overall diamond drilling strategy as production
contains numerous large mineral deposits of various types
at Zone III plateaus and new mining fronts at Zone II are
making the Yanshan one of the most economic regions
established. Technical structural lithogeochemical studies
in northern China. The local geology at Caijiaying
have been carried out over many years and have been
comprises of early Proterozoic granulite and gneiss with
instrumental in advancing the geological understanding of
marble lenses, overlain unconformably by the Late Jurassic
the Caijiaying Mine. These research studies are ongoing
Baiqi Formation and Zhangjiakou Formation. Porphyry
and will continue into 2024 with a focus on advanced
sills and dykes, intruding along faults, subsequently cut
geochemical and structural modelling and exploration
across the geological sequence. Mineralisation is believed
target generation at Zone II.
to be related to a Jurassic igneous event that altered the
2.3-billion-year-old metamorphic basement rocks.
At the northern end of Zone III, a dedicated exploration
drill drive has been constructed at the lower 1020RL
The Caijiaying Mine hosts base metal and gold
to enable deep exploration drilling to depths below
mineralisation characteristic of a distal skarn replacement
the 500RL. This diamond drilling, which commenced
mineral system. Lithologies comprise a mixed sequence
in December 2023, aims to test for extensions to the
of amphibolite-grade metavolcanic and metasedimentary
current resources down to the 500RL and to explore for
rocks intruded by three generations of Jurassic porphyry
repetitions at depths near the 0RL. In 2024 pre-collars
dykes and sills that crosscut the mineralisation. The
will be drilled to enable exploration drilling to a down-
mineralisation commonly occurs as sulphide lenses of
hole depth of 1400m. This deep exploration drilling is
coarse sphalerite with lesser pyrite and minor galena
planned to commence in late 2024.
that preferentially replace calc silicate and iron enriched
amphibolite units within the folded basement rocks.
Zone II covers an area of 1,300 metres x 1,100 metres x
500 metres and offers excellent exploration potential
The mineralisation at Zone III is complex and formed
outside known resources in all directions. Historic surface
within the favourable meta-volcanic units that have
IP geophysical surveys and surface drilling has identified
undergone structural deformation and hydrothermal
several exploration targets in these areas and these remain
alteration. The orebodies occur as upright isoclinal folds
largely untested due to limited underground access. Zone
in the west of the mine, adjacent the regional north-south
II mine development currently under construction will
Grasshopper Fault. Towards the east, these folds transition
enable effective diamond drilling access for exploratory
to inclined open folds, resulting in narrower and more
drilling planned for 2024.
structurally complex mineralization. Orebodies of Zn-Au-
Ag-Pb are up to 20 metres thick at fold closures and narrow
Regional Exploration
to less than 2 metres at depth and to the east where the
fold limbs dominate. Generally, mineralisation at Zone III
tends to dip steeply to moderately westward and extends
along strike with a shallow 20 metre north plunge. Mining
activity at Zone II is in its early stages, with geological data
primarily sourced from diamond drill core. Unlike Zone
III, Zone II features limited underground development for
detailed underground geological mapping although this is
set to change throughout 2024.
Continued safe production and mine expansion at the
Caijiaying Mine continue to be the core focus for the
Company. While there have been no regional exploration
activities, the Company continues administrative efforts to
unlock the full exploration potential at the adjacent Zone
V and Zone VIII project areas. In addition, research and
site visits for potential project acquisitions occurred both
within and outside Hebei province.
18
Griffin MininG LiMited Underground drilling at the Caijiaying Mine
19
RepoRt and accounts 2023 20
Griffin MininG LiMited Caijiaying Mine Tailings Storage Facility 4
21
RepoRt and accounts 2023 Caijiaying (continued)
OPERATIONS
Production at the Caijiaying Mine in 2023 and 2022 may be summarised as follows:
Year to 31 December
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
2023
1,505,642
1,513,977
56,933
17,052
314,667
1,546
2022
852,579
831,549
31,787
10,137
224,587
940
2023 was, as forecast, the first year in the history of the
and investigations were undertaken to identify the best
Caijiaying Mine that sustained production at the enhanced
available automated processes in China for deployment at
rate of 1.5 million tonnes of ore was achieved. This enabled
the Caijiaying Mine, all of which are focused on reducing
the existing capacity of the Caijiaying Mine to be realised
operating costs and maintaining sustainable production.
for both mining and processing.
Safety, as always, continues to be a key focus for the
The throughput achievement of 1.5 million tonnes per
Company. 2023 was a transition year in improving reporting
annum (“mpta”) was the result of 3 years of planning and
and identification of hazards, including utilising a unified
work following restrictions of Covid-19.
digital reporting platform deployable on mobile devices.
The increased production rates generated record amounts
The digitisation of safety data and high levels of
of metal in concentrate, propelling the Caijiaying Mine
reporting
integrated
into performance
indicators
into the top six zinc metal in concentrate producers in
has driven a deeper understanding of key areas of
China and a reliable source of high quality concentrate on
needed improvement focused on the supervision and
a scale that can compete with imported products.
development of fundamental skills and awareness related
Both mining and milling will transition into a sustained
phase focused on technology deployment for incremental
safety, cost and production improvements in 2024 and
to mechanised mining and processing. This has enhanced
safety awareness targeting local cultural attitudes and
hazardous practices.
beyond. This will be implemented with automation and
Expansion of the Caijiaying Mine into Zone II commenced
mechanisation.
Mine automation is focused on the deployment of western
technology to eliminate manual tasks. Key targets are
paste fill systems, shotcrete, cable bolting and emulsion
explosives being deployed with remote loading, all of
which represent safe production improvements.
The mill optimisation program is focused on automation
and improving the efficient use and consumption of
consumables. In 2023 trials began for grinding media
in 2023 with the development of the Southern Ventilation
shaft and underground development from Zone III.
Expansion of Zone II is a three year project and by the end
of 2023 access from the existing underground workings at
Zone III was completed with work commencing on a third
portal and internal declines. The development schedule for
Zone II will see sustained ore produced from Zone II, as
allowed under Chinese regulations, in the last six months
of development, as part of the approval process and ramp
up to full production.
22
Griffin MininG LiMited
Regulatory permission to conduct exploration and resource
The new dry stack Tailings Facility 4 (“TSF4”), phase
drilling below 1000RL was granted in 2023. Application
1 uplift, was completed in April 2024 and the full safety
for the conversion of the retention licence into a mining
facility design approval is expected imminently.
licence at Zone VIII, which will include work below the
1000RL, is now being prepared.
Whilst the Life of Mine Plan continues to be reviewed,
only minor amendments have been made with ongoing
resource definition drilling mainly at Zone II. With
continued drilling results and positive work in Zone III,
the mine life continues to look well supported to 2050 and
beyond. Future optimisation of the mine plan is focused
on zero waste and renewable energy to reduce total capital
spending and maintaining the current world class low
operating costs.
The 6MW solar facility was successfully commissioned
without incident in August 2023. On a full utilisation
day, this facility provides up to 30% of the Caijiaying
Mine’s energy requirements. Future renewable energy
deployment will be focused on expanding the solar, wind
and battery systems utilising the same end user model
that has proven successful with the solar project to utilise
domestic green energy programs.
The fourth TSF4 provides for a minimum of 3 lifts and
minimum life span of 7.5 years. However, ongoing work
to achieve zero waste is progressing with the objective of
eliminating the need to construct any additional tailings
facilities. The utilisation of mine tailings for bricks and
construction material is being optimised with western
technology and support by the Hebei Provincial Government
which is funding a separate project into tailings utilisation.
A primary objective for 2024 and beyond is to focus on
sustainability. Continued development of the already strong
local relationships will continue, including the deployment
of next step trainee programs for non-university graduates
in the form of skilled labour and supervision to create a
sustainable local workforce with value-add potential.
Commitment to operational
improvements and the
continual problem-solving
approach
required
for
world class technological deployment remains in place.
The ability of the Caijiaying Mine to continually develop
and improve is a testament to the success of the Company.
23
RepoRt and accounts 2023 24
Griffin MininG LiMited Construction of the Caijiaying Mine’s new southern ventilation shaft
25
RepoRt and accounts 2023 FinanCial results
SUMMARY
In 2023 the Company and its subsidiaries (together the
“Group”) recorded;
• Revenues of $146,023,000 (2022: $94,397,000);
• Gross profit of $51,842,000 (2022: $38,252,000);
Operating
(administration) expenses, excluding
the
Chinese partners profit share and share incentive scheme
charges, rose by $854,000 (4.2%) from that in 2022.
The Chinese partners share of Hebei Hua Ao’s profits
increased by $1,505,000 (62.7%) from that in 2022, which
was subject to force majeure provisions. The results for
2023 include a charge of $3,019,000 (2022: nil) relating to
• Earnings before depreciation, interest and tax of
a share incentive plan.
$51,863,000 (2022: $35,215,000)
The Group benefited from interest receipts on bank
• Operating profit of $23,837,000 (2022: $15,625,000);
deposits of $1,394,000 in 2023 compared with $369,000 in
• Profit before tax of $24,486,000 (2022: $15,272,000);
• Profit after tax of $15,236,000 (2022: $7,704,000); and
2022. As a result, Group profits before tax increased from
$15,272,000 in 2022 to $24,486,000 in 2023.
• Basic earnings per share of 8.03 cents (2022: 4.41
TURNOVER
cents).
Record amounts of ore were mined, hauled and processed
in 2023, with throughput reaching mill name plate capacity
of 1.5 million tonnes per annum, resulting in record zinc
metal in concentrate production.
Ore mined was up 76.6% to 1,505,642 tonnes on that in
2022, all of which was extracted from Zone III at Caijiaying,
and ore processed up 82.1% to 1,513,977 tonnes on that in
2022, resulting in:
Turnover in 2023 of $146,023,000 was up $51,626,000
(54.7%) on that achieved in 2022 of $94,397,000. This
reflects zinc in concentrate sales up $35,552,000 (46.5%)
with 57,998 tonnes of zinc metal in concentrate sold in
2023 compared with 30,422 tonnes in 2022, an increase of
90.6% reflecting higher production whilst the average zinc
metal in concentrate prices received fell from $2,513 in
2022 to $1,931 in 2023, a fall of 23.2%. This reflects a fall
in the average LME price from $3,488 in 2022 to $2,647 in
2023, whilst smelter treatment charges and transport costs
• Zinc metal concentrate production was up 25,146
have fallen from 27.9% of LME in 2022 to 27.0% in 2023
tonnes (79.1%) on that achieved in 2022;
with significant falls in the last quarter of 2023 to 21.8%.
• Gold in concentrate production up 6,915 ozs (68.2%)
on that achieved in 2022;
Lead and precious metal in concentrate sales in 2023
of $42,428,000 were up $18,875,000 (80.1%) on that
• Silver in concentrate production up 90,080 ozs (40.1%)
achieved in 2022 of $23,553,000. This reflects increased
on that achieved in 2022; and
lead and precious metals sold, with higher production and
higher metal prices received.
• Lead in concentrate production up 606 tonnes (64.5%)
on that achieved in 2022.
Whilst market prices for zinc fell in 2023, smelter
treatment charges and transport costs fell from 27.9% of
LME in 2022 to 27.0% in 2023 with significant falls in the
last quarter of 2023 to 21.8% and to 15.3% in March 2024.
Gold prices have increased throughout 2023 as have silver
and lead prices with Hebei Hua Ao receiving a premium
price on lead and gold in concentrate sales.
With increased ore mined, hauled and processed, produc-
tion (mining, haulage, and processing) costs increased by
$38,036,000 (67.7%) from that in 2022 with production
costs per tonne of ore processed falling from $65.8 per
tonne in 2022 to $62.6 per tonne in 2023.
26
Griffin MininG LiMited 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 ($000s)
Royalties
Zinc metal in concentrate sold (tonnes)
Lead metal in concentrate sold (tonnes)
Silver in concentrate sold (ozs)
Gold in concentrate sold (ozs)
Average price received per tonne (zinc) ($)
Average price received per tonne (lead) ($)
Average price received per ounce (silver) ($)
Average price received per ounce (gold) ($)
COST OF SALES
Total cost of sales (mining, haulage, and processing) costs
increased by $38,036,000 (67.7%) from $56,145,000 in
2022 to $94,181,000 in 2023 with production costs per
tonne of ore processed falling from $65.8 per tonne in
2022 to $62.6 per tonne in 2023. This in the main reflects
the impact of the suspension of operations in 2022.
Costs of sales may be summarised as follows:
2023 Per tonne
ore
Mining costs
Haulage costs
Processing costs
Depreciation depletion and amort’
Stock and WIP movements
$000
25,579
18,098
23,197
25,385
1,922
94,181
2023
112,008
3,949
6,172
32,306
(8,413)
57,998
1,557
317,348
17,107
1,931
2,535
20.1
1,952
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
$
17.0
12.0
15.4
Per tonne
ore
$
19.7
12.2
16.9
2022
$000
16,782
10,377
14,390
17,757
(3,161)
62.6
56,145
65.8
MINING
HAULAGE
1,505,642 tonnes of ore were mined in 2023, up 76.5%
1,509,098 tonnes of ore were hauled in 2023, up 79.7% on
on that mined in 2022 of 852,579 tonnes, reflecting near
that hauled in 2022 of 839,685 tonnes, tracking ore mined.
continuous production in 2023. Mining costs in 2023
Haulage costs in 2023 were up $7,721,000 (74.4%) on that
were up $8,797,000 (52.4%) on that in 2022, resulting in a
in 2022, resulting in a reduction in unit costs from $12.2
reduction in unit costs from $19.7 per tonne mined in 2022
per tonne hauled in 2022 to $12.0 per tonne in 2023.
to $17.0 per tonne in 2023, reflecting economies of scale
with fixed mine service costs.
27
RepoRt and accounts 2023
FinanCial results (continued)
PROCESSING
PROFITS BEFORE TAX
1,513,977 tonnes of ore were processed in 2023, up 82.1%
After interest, foreign exchange adjustments and other
on that processed in 2022 of 831,549 tonnes, tracking
income, a profit before tax of $24,486,000 was recorded
ore mined and hauled. Processing costs in 2023 were
for 2023 compared to $15,272,000 in 2022. The profit
up $8,807,000 (61.2%) on that in 2022, resulting in a
before tax in 2023 was after charging / crediting;
reduction in unit costs from $16.9 per tonne processed in
• FX losses of $136,000 (2022: losses $387,000);
2022 to $15.4 per tonne in 2023.
DEPRECIATION
Depreciation charges in 2023 were up $7,628,000 (42.9%)
on that incurred in 2022 reflecting increased ore mined
• Bank interest charges of $24,000 (2022: $nil);
• Lease interest $43,000 (2022: $48,000);
•
Interest in respect of rehabilitation provisions $110,000
(2022: $87,000);
•
Interest receipts of $1,394,000 (2022: $369,000);
with depreciation calculated on a unit of production basis.
• Losses on the disposal of fixed assets of $784,000 (2022:
OPERATING EXPENSES
$404,000); and
• Other income of $352,000 (2022: $204,000).
Operating (administration) costs (excluding the minority
TAXATION
interest charges and share incentive scheme charges) in
2023 of $21,083,000 were up $854,000 (4.2%) on that
incurred in 2022 of $20,229,000.
Hebei Hua Ao’s operating costs in 2023 of $14,393,000
were up $1,161,000 (8.7%) on that incurred in 2022 of
$13,232,000. Renminbi impacted administration costs
increased by 14.5%, primarily on increased personnel
costs and ongoing increased environmental and safety
Taxation of $9,250,000 was provided for in 2023 (2022:
$7,568,000) being; 25% of Hebei Hua Ao’s profits under
Chinese GAAP amounting to $10,881,000; withholding
taxes of $897,000, primarily of 5% on inter company
dividends received; UK corporation tax of $179,000 on
Griffin Mining (UK Services) Limited profits; and a
deferred tax credit of $2,694,000.
regulatory compliance costs.
EARNINGS PER SHARE
Griffin and Griffin Mining (UK Services) Limited
company corporate costs of $5,880,000 (excluding share
incentive scheme charges) were down $536,000 (8.4%) on
that incurred in 2022 of $6,416,000 with the termination
Basic earnings per share increased from 4.41 cents per
share in 2022 to 8.03 cents per share and diluted earnings
per share from 4.11 cents in 2022 to 7.98 cents in 2023.
of investor relations services, lower directors’ bonuses,
CASH FLOW
lower travel costs and reduced directors’ and officers’
liability insurance premiums.
China Zinc’s operating costs in Hong Kong of $723,000
were up $244,000 (50.8%) on that in 2022 of $479,000,
with the engagement of additional personnel to investigate
potential projects.
$3,903,000 has been charged to profit and loss in respect of
service fees based upon the profits of Hebei Hua Ao in 2023
compared with $2,399,000 in 2022, which was adjusted for
force majeure days when operations were suspended.
A charge of $3,019,000 has been made in respect of the
share incentive scheme instigated in March 2023 which
allocates the value of the shares granted at date of grant
over the period of return in the event of personnel leaving.
In the year ended 31 December 2023 cash and cash
equivalents increased by $25,869,000.
$48,377,000 (2022: $15,734,000) was generated from
operations in 2023. Capital expenditure, net of disposals,
of $23,279,000 (2022: $21,301,000), was incurred in 2023.
Interest on bank deposits of $1,394,000 (2022: $369,000)
was received in 2023 and interest incurred on bank
loans, bank loans and lease payments of $182,000 (2022:
$167,000) were incurred in 2023. $373,000 (2022: $nil)
was incurred buying back the Company’s shares.
NET ASSETS
Attributable net assets per share at 31 December 2023 was
$1.40 (2022: $1.40).
28
Griffin MininG LiMited sustainability, environment and loCal Community
SUSTAINABILITY OVERVIEW
The directors and management are focused on ensuring
the long-term sustainability of the Group and its business
to benefit
its shareholders and other stakeholders.
Sustainability is supported by the Group’s values; operating
in an environmentally responsible manner by continually
improving circular and low-carbon operations including
engagement in green partnerships, targeting zero waste,
prioritising the health and safety and development of
employees, conducting business with integrity throughout
the Group and supply chain as well as actively engaging
and contributing to the local community around the
Caijiaying Mine.
CARING FOR THE ENVIRONMENT
for the Caijiaying Mine to be the sole consumer of energy
generated from two 6.3MW wind turbines generating a
total of 12.6MW of wind power. The wind turbines will
be constructed within 2.5km of the Caijiaying Mine and
connected to the current 36,000 volt mains electrical
power lines. ZGNE is Hebei Hua Ao’s current partner
for the fully operational 6MW Solar Farm facility located
on the rehabilitated Tailings Facilities 1 and 2 at the
Caijiaying Mine. This new wind turbine agreement is a
natural extension of the already successful local partnership
between Hebei Hua Ao and ZGNE.
Once completed, the Caijiaying Mine will have 18.6MW
of renewable electrical capacity at peak generation which
exceeds the current 18.1MW peak usage. In accordance
with current People’s Republic of China regulations,
this is the maximum electrical capacity an independent
private enterprise may develop. The project is expected
to be completed within 12 months, including all
approvals and construction.
Hebei Hua Ao remains committed to 100% renewable
energy. In addition to this renewable energy generation,
The Caijiaying Mine is a PRC certified Green Mine
Hebei Hua Ao is examining the installation of large-
and has obtained ISO14001 environmental management
scale battery storage capacity and the purchase of wind or
systems (EMS) certification. The strategy adopted by
solar energy directly from state owned renewable energy
Hebei Hua Ao’s Green Mine Leading Group (led by
projects in close proximity to the Caijiaying Mine to
the Chief Operating Officer) is to improve mining
achieve 100% renewable power at all times regardless of
sustainability through its commitment to collaboration
light or wind conditions.
and innovative technology.
Griffin Mining is committed to sustainable production and
GREEN MINING AND EXPLORATION
strict adherence to the County, Municipal, Provincial and
Safety is Hebei Hua Ao’s core value with the objective of
National objectives of the Green Mine Initiative.
In the last 2.5 years Hebei Hua Ao has invested over
Rmb150m
in emission reduction, regenerative and
sustainability projects.
Sustainability
is embedded throughout Hebei Hua
Ao from the Board to the employees on site. Low
environmental impact mining techniques are preferred
using eco-friendly equipment; when mining waste cannot
be reused, its harmful effects are mitigated as far as possible.
Rehabilitation of tailings facilities is a key environmental
project for Hebei Hua Ao.
Hebei Hua Ao aims to achieve net zero through collaboration
in local partnerships to produce green energy.
zero harm for employees, contractors and visitors. Further
information can be found in the social responsibility
section of this review.
Hebei Hua Ao’s current reported mineral resources are in
excess of 80 million tonnes. The life of mine plan shows
the mine to be profitable at a production rate of 1.5 million
tonnes until at least 2050. Zone III is in production and Zone
II is in development following the grant of a mining licence
and approval of the safety facility design. Applications for
mining licences for Zones V and VIII are underway.
Underground mining is used to extract the resource which
minimises the impact on the environment. Advanced
ground control management
techniques eliminate
subsidence. The stability of the ore is assessed using
In April 2024 Hebei Hua Ao entered into an agreement
Unwedge rock mechanics software and increased by
with Zhangjiakou Guoao New Energy Co Ltd (“ZGNE”),
using long anchor cable supports. The extraction of ore
29
RepoRt and accounts 2023 30
Griffin MininG LiMited Cable Bolting Rig
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RepoRt and accounts 2023 sustainability, environment and loCal Community (continued)
is effected by using advanced geological and diamond
and moving jaw body assembly of the jaw crusher provides
drilling technology so controlling grades, waste and cost.
protection for the key components of the crushing system.
The mine waste is backfilled and up to 70% of tailings are
The closed-circuit grinding system ensures the correct
returned to the workings underground as cemented paste
granularity of the ore for flotation to maintain the
fill. This provides additional stability to enable further
recovery rate of metals. An automatic slurry sampler in the
extraction and reduces the need for surface storage in
grinding process samples the slurry every half hour to assay
tailings facilities and stockpiles.
moisture, granularity and grade.
Hebei Hua Ao is actively seeking to agree partnerships
Automatic sampling in the three stage flotation process
with equipment suppliers who are at the forefront of
maintains the rate and quality of the concentrate. Ceramic
developing battery electric technology to replace existing
filters adjust any problems identified with moisture.
diesel powered equipment. Advanced automation will
The chemicals used in the flotation process are regularly
improve the safety of working conditions underground as
checked by independent laboratories.
well as reducing costs.
Hebei Hua Ao has adopted a sustainable ecologically
responsible exploration strategy and engages with local
communities to minimise disruption on the land where
exploration is planned. A baseline study of vegetation is
undertaken so that where indicators of potential geological
anomalies are identified there is a bench mark for
restoration of habitat.
Exploration targets are pinpointed using non invasive
airborne or satellite surveys. The choice of sampling
technology and equipment minimises the exploration
footprint as does the use of green drilling programmes.
PROCESSING
In 2023, Hebei Hua Ao obtained ISO9001 quality
management
systems
(QMS)
certification,
thus
demonstrating the systematic management of product
quality.
Hebei Hua Ao consistently meets product quality
standards and
requirements, optimises production
process configurations, enhances digital construction
and innovation, and monitors the concentrate grade and
moisture content to meet customer expectations.
A two-stage dewatering process consisting of thickener
and ceramic filters keeps the moisture of the concentrate
product at about 10%. The dewatered zinc concentrate
is stored in bulk while the dewatered lead 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, Hebei
Hua Ao 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.
In 2023, Société Générale de Surveillance SA (SGS),
an internationally recognised testing, inspection and
certification organisation, conducted an audit of the
laboratory’s sample collection and analysis processes and
all the problems identified in the audit were rectified.
WASTE
A key element of the Green Mine Strategy is a commitment
to zero waste. Operations are planned to reduce waste
by deploying technology at all stages of the mining and
processing operations. For example, advanced processing
techniques enable circa 96% of contained zinc metal, circa
The main production processes of Hebei Hua Ao include
65% of contained gold, circa 50% of contained silver and
ore crushing, milling, lead flotation, zinc flotation, lead
circa 70% of contained lead to be recovered in concentrate
concentrate dewatering, zinc concentrate dewatering, and
for sale. Sulphide minerals are eliminated allowing the
other processes.
tailings to be used safely in construction materials. If waste
is reduced so will the requirement for remediation.
In the ore crushing process, Hebei Hua Ao adopts a three-
stage and one closed-circuit process to improve the ore
Having minimised waste, Hebei Hua Ao is mindful of its
crushing rate. Ore is screened and crushed again until it
duty to manage the waste produced responsibly to protect
meets the required granularity. In 2023, a new 8-tonne
the environment and local communities with safety always
loader delivered ore to the crusher. A bar screen feeder
the priority.
32
Griffin MininG LiMited REPURPOSE OF TAILINGS
Roads are maintained to prevent unnecessary noise and
trees planted to create barriers for unavoidable noise.
Tailings not used in backfilling the mine are provided
to local brick manufacturers for the production of bricks
and other materials for construction, thus providing a low
WATER USAGE
cost and low energy source of material for local industry
Water is a precious resource and conservation is prioritised
removing the need to deplete sand and clay reserves.
EXHAUST GAS
throughout Hebei Hua Ao and all its processes. Waste
water is generated from domestic sewage, production and
mine dewatering, however, it is not wasted but recycled as
explained below.
Hebei Hua Ao complies fully with all emission standards.
An ultra-low emission 40 tonne steam boiler is used
Domestic sewage is treated and used in the production
at Caijiaying to provide heat to the mine and surface
process and sprayed on the ground to suppress dust in
facilities. Bag filter, lime gypsum process, SNCR + SCR
summer. The water used in production is filtered before
combined denitrification process, respectively, are used for
being reused in processing. Zero water is discharged from
the treatment of soot, sulfur dioxide, and nitrogen oxides
the mine by utilising the water during processing after
from the boiler. This has enabled Hebei Hua Ao to meet
filtration.
Hebei Provincial local standard, the Emission Standard of
Air Pollutants for Boiler (DB13/5161-2020). During the
reporting period, Hebei Hua Ao achieved full compliance
with PRC emission standards for both “organised” and
“unorganised” exhaust gases.
Coal consumption is targeted to reduce to less than 10,000
tonnes per annum.
In the mine, online Total Suspended Particulate (TSP)
monitors have been installed to ensure the concentration of
particulate emissions meets emission standards. Advanced
ventilation systems reduce dust and emissions.
Tailings are dewatered and the water is reused thus
achieving full recycling of all domestic and production
wastewater.
REHABILITATION
Hebei Hua Ao has engaged in a continuous project of
rehabilitation whilst the mine is in operation.
Two tailings facilities have already been fully rehabilitated.
The social licence to operate is fulfilled by ensuring the
mine and surrounding environment are safeguarded using
all available technology with a commitment to ecological
The main air pollutant from the production process is dust.
restoration and effective environmental management. The
Covers and bag filters ensure dust collection efficiency of
benefits of this approach are numerous, including:
98.5%. At the mine site, dry sweepers and water trucks are
used with regular cleaning and water spraying to reduce
the dust. Ore dumps are protected with windproof dust
suppression nets.
WASTE DISPOSAL
Hazardous wastes are managed and stored before being
removed by suitably qualified third parties for disposal.
Noise management
Blasting, mine machinery, the crushing, screening and
grinding of aggregates as well as boiler room fans and mine
ventilation fans all generate noise. As mining activity takes
• Safer working conditions for employees
•
Improved relationships and contribution to the
community
• More profitable business
• Less disruption and therefore more reliable production
• The active support of local green energy investment
• A reduction in future mine closure costs for Hebei Hua
Ao and the local government
• A reduction in environmental liability and risk
• The potential
identification and realisation of
unforeseen opportunities
•
Improved reputation and shareholder value
place below underground there is less impact than above
In Green Energy partnerships, Hebei Hua Ao provides
ground. Absorption eliminates the noise associated with
secure end user offtake agreements to enable the financing
production as far as possible.
of local energy developments such as wind and solar.
33
RepoRt and accounts 2023 sustainability, environment and loCal Community (continued)
The rehabilitated tailings have provided land for the
Hebei Hua Ao continuously enhances mining process
installation of solar panels. In October 2023, in partnership
capabilities, advances the implementation of digital mine
with Zhang Jia Kou GuoAO, Hebei Hua Ao successfully
construction solutions, and upgrades the application of
commissioned a 6MW solar energy generating facility
digital systems such as automated centralised control
at the Caijiaying Mine. The facility was constructed and
systems, mine automation systems, unmanned working
commissioned within 12 months on Hebei Hua Ao’s
faces, 3D modelling of resource reserves, and reserve
rehabilitated Mine Tailings Facilities Numbers 1 & 2. The
management software.
facility contains 25,753 square metres of solar panel surface
area. With a battery energy saving system, under normal
weather conditions, the facility is expected to be able to
supply up to 30% of the Caijiaying Mine’s total electrical
energy consumption. During periods of shutdown, the
system also has the capacity to direct excess capacity back
into the local grid for extra revenue generation.
The management of detonators and explosives has been
digitized and Programmable Logic Controller (PLC)
control systems are used in crushing, grinding, power
supply, and heating. In addition Hebei Hua Ao has
embraced technology by:
• Adopting advanced Micromine 3D mining engineering
software and digital technologies such as rapid circling
Hebei Hua Ao provided all the land, approval support and
of multi-pointer geological body boundaries for ore
an exclusive 20 year off-take agreement for the renewable
body circling, reserving calculation and 3D modelling,
energy to a local energy company, which will operate the
so as to effectively enhance the efficiency of mineral
system throughout its life. This facility demonstrates,
resources exploration and strive to maximise the
yet again, Hebei Hua Ao’s long term, industry leading,
environmental and economic benefits of mineral
environmental and community leadership for sustainability
resources development;
and the benefits of socially responsible mining.
Both companies are currently assessing the utilisation
of this successful partnership model on the soon to be
decommissioned Tailings Facility Number 3 which has
the potential to utilise both wind and solar power (subject
to a pending study) to make the Caijiaying Mine as close to
100% renewable energy usage as possible.
Energy conservation and reductions in consumption
are enforced in the office. Energy efficient inverter
air compressors have replaced industrial frequency air
compressors and LED energy saving bulbs have been
installed. Leaving equipment on standby is discouraged as
is printing of documents, except when absolutely necessary.
• Adopting the frequency conversion control system,
timely remote operation is carried out to adjust the
operating frequency of the main fan engine and air
compressor in accordance with the underground
production changes and demands, effectively reducing
the operating energy consumption of the equipment,
and lowering the manpower cost while improving
energy efficiency;
• Applying Ventsim mine ventilation software for
ventilation simulation and improvement based on
actual measurements, providing safer and more
efficient ventilation for the mine;
• Using “Teams” software and the “Eblog” dual-control
software for coordinated office work, refining project
assignments, adjusting collaboration in real-time, and
INNOVATIVE TECHNOLOGY
improving work efficiency.
Collaboration between the government and the developing
Hebei Hua Ao actively engages in collaborative research
green sector fosters ongoing technological development
between industry, academia, and research institutions. In
which lowers operating costs.
Hebei Hua Ao is working with the University of Science
and Technology in Beijing using a Mineral Dissociation
Analyser (MDA) to improve recoveries of gold and silver
as well as processing the ore with new chemicals developed
in the PRC.
2023, the Beijing University of Science and Technology
completed flotation test research on ore from the main ore
zone of Hebei Hua Ao, providing technical support for the
optimal and better utilisation of ore from the main ore zone.
Additionally, there is a history of long-term cooperation
with the China ENFI Engineering Technology Co.,
Limited. Professional personnel from ENFI visit the
34
Griffin MininG LiMited site monthly to understand the technical challenges
Hebei Hua Ao
conducts environmental quality
encountered during construction and provide suggestions.
monitoring of the soil around the vicinity of the mine
With the support of digital mine construction solutions
and processing facilities and performs water quality
and collaborative research between industry, academia, and
testing on groundwater in the surrounding upstream and
research institutions, Hebei Hua Ao completed 26 shafts in
downstream areas, continuously monitoring changes in
2023, with a success rate of over 80%.
the surrounding environment.
BIODIVERSITY CONSERVATION
Hebei Hua Ao’s environmental management systems aim
to avoid negative environmental impacts where possible
and to substantially reduce those that remain. Protection
of the surrounding ecological environment is a priority
and various ecological conservation measures minimise the
potential negative impact on the surrounding ecosystems
during mineral resource development activities.
Climate change is one of the most important global
challenges. Hebei Hua Ao’s risk review is explained in the
Strategic Review.
As well as putting measures in place to mitigate these risks,
the Board is aware of the opportunities related to the global
energy transformation as demonstrated by the photovoltaic
power generation project already in operation.
Key Environmental Performance Indicators - Emissions:
2023
2022
Total GHG emissions (Scope 1 and Scope 2) (tonnes CO2 equivalent)
71,179.75
45,044.79
Direct GHG emissions (Scope 1) (tonnes CO2 equivalent) including:
Diesel
Coal
Indirect GHG emissions (Scope 2) (tonnes CO2 equivalent) including:
Purchased electricity
1,544.13
12,526.29
925.61
7,812.28
57,109.3
36,306.90
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:
1.77
0.32
0.35
0 0
0 0
63.55
141.22
2.21
0.90
0.19
35.43
79.12
• 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 Hebei Hua Ao; Scope 2 GHG covers
“indirect energy” GHG emissions from Hebei Hua Ao’s internal consumption (purchased or obtained).
• Nitrogen oxides, sulphur dioxide and dust mainly emanate from heating boilers.
• During the reporting period, the new low emissions coal-fired boiler has been put into use, so the exhaust emissions and greenhouse gas
emissions, the comprehensive energy consumption data have increased overall compared with the previous year.
• Operations were suspended at the Caijiaying Mine for five months in 2022.
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RepoRt and accounts 2023
sustainability, environment and loCal Community (continued)
Key Environmental Performance Indicators - Energy and Resources Consumption:
Total energy consumption (MWh)
119,196.89
75,308.12
2023
2022
Direct energy consumption (MWh) Including:
Diesel
Coal
Indirect energy consumption (MWh) Including: Purchased electricity
Total water consumption (10,000 tonnes)
Notes:
0.006
38,975.89
80,221.00
46.97
0.003
24,308.12
51,000.00
38.56
• 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).
• Operations were suspended at the Caijiaying Mine for five months in 2022.
SOCIAL RESPONSIBILITY
SAFETY MANAGEMENT
including Department Managers, Department Supervisors,
Safety Officers, Technical Personnel, Shift Leaders, and
Section Leaders. All employees are required to sign safety
production target responsibility agreements.
The Annual Work Safety Plan sets out Hebei Hua Ao’s
annual work safety objectives. In 2023, Hebei Hua Ao’s
work safety objectives were as follows:
As a mining company, safety is our core value and
integrated into all aspects of Hebei Hua Ao’s operations.
• Work-related fatalities and serious injuries 1, and
occupational illness 0;
Emphasis is placed on the prevention of accidents,
maintaining standards of safety management, and ensuring
that “safe production is everyone’s responsibility, and
everyone knows their responsibility.”
The Safety Committee is responsible for conducting
production safety inspections. The Chief Operating
• 3% reduction in minor injuries from 2022;
• 100% safety training rate;
• “Three positions” personnel
(the main person
in charge, safety management personnel, special
operators) with a certificate on duty rate of 100%;
Officer is in charge of the Safety Committee, the Deputy
• Special equipment inspection pass rate at 100%.
Operations Manager and Safety Director serve as deputies
and department heads as committee members. A dedicated
Safety Department is responsible for safety production
management, staffed with a sufficient number of qualified
safety production management personnel trained by
government authorities.
In 2023,
to
strengthen on-site
safety
inspection
requirements, Hebei Hua Ao has established a “Safety
Production Responsibility System” with key performance
indicators and a penalty mechanism for the Caijiaying
Mine employee bonus system, clearly defining safety
responsibilities, behaviours, and duties for all positions
Employees conduct a “Job Safety Analysis” (JSA) before
starting work, identifying hazards and conducting safety
risk assessments before commencing work. In 2023,
Hebei Hua Ao organised a total of four quarterly safety
production major inspections, 12 comprehensive leadership
safety major inspections, and conducted safety production
inspections throughout the mine site more than 120 times.
Hebei Hua Ao organised more than 30 professional and
special safety inspections. All identified hazards during
safety inspections were rectified. During the reporting
period, we did not have any work-related fatalities and
achieved the established production safety targets.
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Griffin MininG LiMited
In 2023, Hebei Hua Ao conducted safety training as
Health and Safety
of Employees
follows:
Training Type
Indicators
2023
2022
2021
Number of Participants
(Person-time)
Total number of
work-related fatalities
Lost days due to
work injury
0
0
0
Training for management personnel
Training for special operation
Training for special equipment
340
86
180
Safety regulations for confined space operations
Safety training
Note: The increase in lost days due to work injury in 2023
Emergency rescue team training
related to one employee involved in a single incident.
New employee training
Specialised training
33
25
49
805
491
779
74
69
EMERGENCY PLAN FOR SAFETY
ACCIDENTS
Hebei Hua Ao continues to improve its emergency
The total safety training hours in 2023 was 20,203 hours.
CONTRACTOR SAFETY MANAGEMENT
management of production safety accidents, enhance the
Contractors are incorporated into Hebei Hua Ao’s safety
rapid and effective handling of accidents at the initial stage,
management system. The Work Safety Management
and prevent the expansion of accidents and the occurrence
Agreement signed by all contractors clearly defines both
of secondary accidents. The “six systems for underground
parties’ responsibilities for the management of accident
safety” utilises
the underground wireless
intercom
hazards identification, governance, and prevention, so as to
system and underground video monitoring system to
strengthen Hebei Hua Ao’s supervision and control over
help management personnel monitor the underground
the entire process of the business of the contractors, and
working environment, changes in personnel position
to reduce the risk of potential accidents. The qualifications
and the working status of equipment to ensure the safe
of contractors and certifications of relevant operating
evacuation of operators in the event of underground
personnel are audited. Contractors complete annual safety
emergencies. An “Emergency Rescue Squad” will
training with Hebei Hua Ao and their injuries are included
reduce the impact of the accident, safeguard employees
in production safety targets.
and reduce the loss of property.
SAFETY TRAINING AND
EMERGENCY DRILL
DEVELOPMENT OF EMPLOYEES
A diverse and inclusive corporate culture at Hebei Hua Ao
which focuses on the long-term development of employees,
In 2023, in accordance with the annual safety production
care of their physical and mental health and fostering a
work and training plan, Hebei Hua Ao conducted
harmonious and safe working environment underpins the
comprehensive safety training for all employees and
success of the Group.
specialised training for new employees. Employees take
exams to test their understanding and practical skills. In
addition, Hebei Hua Ao regularly carries out emergency
drills for the sudden failure of ventilators, emergency
escape from explosives storage or power failure accidents,
as well as fire drills. These activities aim to enhance the
risk prevention awareness of all operational staff and their
abilities to overcome hazards and escape safely during the
early stages of an accident.
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.
Education to promote diversity and recruitment though
a variety of channels will continue to ensure the most
talented employees are attracted and retained at Hebei
Hua Ao.
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RepoRt and accounts 2023
38
Griffin MininG LiMited Caijiaying Mine Camp - Winter 2024
39
RepoRt and accounts 2023 sustainability, environment and loCal Community (continued)
At 31 December 2023, Hebei Hua Ao had 501 employees.
Hebei Hua Ao monitors the welfare of employees to
Employment
Category
By gender
Male
Female
As of 31 December 2023
By management
Management personnel
level
By age
General personnel
Aged 30 and below
Aged 31 to 50
Aged 50 and above
By employment
type
By region
Full-time
Part-time
China
Overseas
Employee Turnover Rate
Category
As of 31 December 2023
Employee turnover rate
By gender
Male
Female
5.6%
5.4%
0.2%
434
67
29
472
37
299
165
501
0
497
4
0.2%
2.6%
2.8%
5.6%
0%
5.6%
0%
By management
Management personnel
0.2%
human rights.
General personnel
5.4%
level
By age
Aged 30 and below
Aged 31 to 50
Aged 50 and above
By employment
type
By region
Full-time
Part-time
Domestic
Overseas
ensure all legal entitlements to holidays and other leave
are taken. To help create a harmonious workplace
environment, Hebei Hua Ao 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. During the Chinese
New Year and Mid-Autumn Festival each year, employees
receive shopping cards for traditional holiday greetings.
Women comprise 13.4% of the workforce. However,
Chinese regulations prohibit women from working in
operational roles underground so only 178 roles are
available to them which increases the participation rate
to 37%. New mothers are allowed to bring their families
and children to stay at the base during working hours,
until the child reaches the age of one at no extra charge
for accommodation or food. During holidays such as
International Women’s Day, Hebei Hua Ao provide
female employees with a half-day vacation.
HUMAN RIGHTS
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,
Hebei Hua Aoprovides employees with training on human
rights and makes every effort to promote the protection of
Hebei Hua Ao complies with the PRC national working
hours system, setting reasonable workloads for employees,
continuously optimising the working hours management
policy, encouraging employees to work efficiently during
normal working hours and take their full entitlement to
holidays. Hebei Hua Ao 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
of the employees and relevant responsible departments.
If employees need to work overtime or exceed normal
working hours, Hebei Hua Ao will pay overtime or arrange
rest periods in accordance with the relevant national and
SALARY AND WELFARE MANAGEMENT
Employees receive a competitive base salary and
Company regulations.
allowances according to their job title, years of experience
and responsibilities, as well as additional rewards for
outstanding performance, behaviour and attitude to
motivate and inspire them.
Hebei Hua Ao 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
40
Griffin MininG LiMited
employment standards. Hebei Hua Ao strictly enforces the
guidance on corporate culture, rules and regulations of
national minimum working age regulations and verifies the
Hebei Hua Ao, and occupational health and safety, on the
identity and age of candidates at the time of recruitment.
basis of clear job responsibilities. New employees integrate
Employees are encouraged
to participate
in
the
democratic management of Hebei Hua Ao, elect employee
into the workplace more quickly under the guidance of
their mentors and with the help of their co-workers.
representatives and hold regular employee representative
The “Special Trades Commissioned Trainee Program”
meetings. A
transparent employee communication
has established links with training schools to cultivate
mechanism has been established including employee
specialist trades skilled workers with strong professional
suggestion boxes to encourage contributions to the
skills to provide succession in key skilled roles such as
development of the Group.
processing and mining maintenance departments.
Hebei Hua Ao set up a trade union many years ago, which
In 2023, Hebei Hua Ao organised a 12-day vocational skills
is used to safeguard the legitimate rights and interests of
training program for 72 employees specialising in welding,
the employees. Representatives negotiate regarding labour
electrical work, and mechanical repairs, conducted by
remuneration, working hours, labour quotas, rest and
professional teachers from universities and training schools.
leave, labour safety and hygiene, insurance and welfare
Hebei Hua Ao also carried out relevant online training and
and supervise the implementation of labour contracts and
practical exercises. The employees successfully completed
mediate any labour disputes. Activity rooms and sports
the state-organised technician skills test in December,
facilities, regular festive gatherings, and team-building
and some of them obtained the certificate of qualification
activities enhance employee cohesion.
for junior workers and the certificate of qualification for
WHISTLEBLOWING
intermediate workers, with a pass rate of 96.5%.
In 2023 the training coverage rate at Caijiaying reached
Hebei Hua Ao encourages all employees to participate in
100%, with a total of 20,203 training hours.
the supervision of integrity and honesty, and has established
a two-way reporting channel. Whistleblowers can report
anonymously, and Hebei Hua Ao keeps the content of
whistleblowers’ reports strictly confidential and prohibits
any form of retaliation against whistleblowers to protect
them from threats, suspension, transfer or dismissal and
other discriminatory punishments.
The total number of trainees was 491, and the per capita
participation in training was 41 hours. Hebei Hua Ao’s
various types of training were carried out as follows:
• Management personnel training: 33 management
personnel received safe production knowledge and
management ability training;
In 2023, Hebei Hua Ao had no major labour disputes or
• Special operation training: 25 operators received
human rights complaints from employees.
training on getting Certificates for Special Operations;
EMPLOYEE DEVELOPMENT AND
TRAINING
• Special equipment training: 49 operators and
management personnel received special equipment
management and operation training;
Employee development is a crucial aspect of Hebei Hua
Ao’s sustainability agenda.
• New Employee Training: 74 new employees received
conducted employee orientation level 3 training;
Employees are the key resource for the Group. Hebei
• Safety training: Internal safety training for 491
Hua Ao develops annual training plans in collaboration
employees.
with employees, designing diversified training courses,
providing induction training, on the job training and
OCCUPATIONAL HEALTH
continuing education and training to optimise the potential
of employees.
Hebei Hua Ao places great emphasis on the safety and
health of employees and conducts occupational disease
New employees complete a 9-day induction training
risk assessments to better prevent, control, and eliminate
programme, which includes detailed communication and
occupational hazards in the workplace.
41
RepoRt and accounts 2023 42
Griffin MininG LiMited Hebei Hua Ao outstanding employees award ceremony
43
RepoRt and accounts 2023 sustainability, environment and loCal Community (continued)
Monthly inspections of occupational hazards are conducted
the Operation Manager at Caijiaying to identify the
by third parties. Based on the results effective preventative
possible risks in the business and operational links;
measures are introduced.
Social medical
insurance and supplemental medical
insurance are provided for employees. Pre-employment,
on-the-job and post-employment health checkups for
occupational diseases are undertaken at Caijiaying, as
well as education on occupational hygiene. Psychological
counselling is available.
• Daily supervision and regular management review to
optimise the anti-corruption and anti-fraud reporting
process and ensure compliance requirements are
implemented;
• Regular
training
to strengthen
the
ideological
education of anti-corruption and further improve
compliance with Hebei Hua Ao’s policies; and
All individuals enter the plant area with safety helmets,
• Formulation of anti-corruption provisions in supplier
protective eyewear, earplugs, and other personal protective
agreements and goods and services contracts, adhering
equipment. Special protective equipment such as water
to transparent procurement.
boots, felt socks, and mining lamps is provided. Production
managers and operators are required to be proficient in
using and maintaining occupational health protection
facilities and personal occupational health protective
equipment. Regular fire drills and emergency exercises are
carried out.
RESPONSIBILITY TO OTHER
STAKEHOLDERS
Hebei Hua Ao 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. It adheres to the business values
of fairness, transparency, integrity and honesty, and has
PROTECTION OF RIGHTS AND
INTERESTS OF CUSTOMERS
Hebei Hua Ao aims to establish a harmonious and stable
cooperative relationship with customers, by constantly
improving customer service and helping customers solve
problems. Hebei Hua Ao 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 and externally.
Hebei Hua Ao takes responsibility for any quality problems
arising in accordance with relevant contracts and laws and
compensates the customers where appropriate.
Hebei Hua Ao respects the privacy and interests of its
customers. Hebei Hua Ao provides regular training to
employees on the confidential management of customer
information and conducts regular inspections to enforce
the requirements of its policy.
formulated employee codes of conduct, set requirements
During the reporting period, Hebei Hua Ao did not
for business ethics and commits to ongoing improvements
receive any complaints or returns regarding product
in its compliance management system. These include:
quality, did not recall products sold due to any safety or
• 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 offered gifts and entertainment;
• Regular review and update of the code of conduct
of employees by the Head of Human Resources and
health concerns and did not experience any breaches of
customer privacy or business information.
BUILDING A SUSTAINABLE SUPPLY
CHAIN
Hebei Hua Ao commits to working with suppliers as
responsible procurement is essential for Hebei Hua Ao to
achieve sustainable development. Accordingly, Hebei Hua
Ao seeks to continuously improve supplier management
systems and procurement processes in accordance with
established company policies.
44
Griffin MininG LiMited Hebei Hua Ao regularly evaluates and assesses suppliers
have directly or indirectly caused serious human rights
to ensure they are fulfilling their environmental and social
violations, conflicts, environmental damage, damage to
responsibilities and strives to build a transparent and
business ethics and other violations, Hebei Hua Ao will
honest supply chain by the establishment of a strict and
immediately terminate its relationship with the supplier.
standardised supplier access process and evaluation system.
At 31 December 2023, Hebei Hua Ao had 380 suppliers in
Suppliers are assessed against a strict set of criteria including
total, of which 379 were in Mainland China and 1 was in
environmental protection, safety management, technology
other countries and regions.
application. Priority is given to suppliers with professional
qualification
certificates
for quality management,
environmental management, occupational health and
safety management and other special product safety
marks. Hebei Hua Ao also evaluates the reasonableness
of suppliers’ product prices through multiple quotations
and price comparisons. To ensure that product quality
meets Hebei Hua Ao’s requirements, product samples
are collected from suppliers, and where appropriate sent
to third-party independent institutions for testing and
analysis, following which the results are evaluated to select
the most appropriate supplier.
In order to reduce greenhouse gas emissions, Hebei
Hua Ao selects suppliers who provide environmentally
friendly products or services. For example, when selecting
dust removal equipment, boiler desulphurisation and
denitration equipment, minerals, geomorphous fabrics,
electromagnetic flowmeters and other materials, suppliers
with professional qualification certifications are chosen.
In addition, priority is given to local suppliers to reduce
logistics costs and environmental pollution.
Annual evaluations are carried out on qualified suppliers
to ensure standards are being maintained by carrying
out onsite inspections, testing product quality, assessing
production, delivery and transportation capacities. Any
suppliers who have not maintained their standards or
who have negatively impacted on the environment are
required to undertake timely rectification. Hebei Hua Ao
will terminate the supply of goods and services from those
suppliers who continue to fail to meet Hebei Hua Ao’s
requirements, do not deliver on time and cannot provide
high quality after-sales service.
Suppliers are required to commit not to employ child
labour, to pay reasonable and legal remuneration to
all types of employees, to support the legitimate rights
and interests of their employees, and to comply with
the human rights of employees. If a supplier is found to
CONTRIBUTING TO SOCIETY
Hebei Hua Ao aims to provide demonstrable improvements
to its local communities and host country. It provides
economic security by prioritising local hiring. As a good
corporate citizen, Hebei Hua Ao’s Community Outreach
Department participates in the local communities, listening
to feedback and suggestions and providing assistance in
accordance with the Community Development Plan.
Hebei Hua Ao provides an annual economic contribution
of Rmb800m to the PRC through its fixed asset investments
and purchases of mining consumables and services. It paid
taxes of Rmb195,453,887 ($28m) in 2023.
In 2023, Hebei Hua Ao donated a total of Rmb 3.3m to
local communities.
PUBLIC WELFARE DONATIONS
Hebei Hua Ao is committed to creating value for the
communities where it operates, fostering sustainable
development and promoting shared prosperity and
development. Since 2010, flour and rice has been donated
annually to Caijiaying Village during the Mid-Autumn
Festival. In September 2023, Hebei Hua Ao donated
festival gifts of 950 bags of flour and 600 bags of rice to
Caijiaying Village in Sanhao Township.
Hebei Hua Ao helps to improve the living conditions of
the elderly and teenagers, the most vulnerable members
of the community in accordance with human rights
commitments. In 2023 Rmb601,900 ($86,000) was
provided in residents’ pension subsidies to improve living
conditions. In order to facilitate socioeconomic progress
Rmb72,000 ($10,000) was provided to the Hebei Youth
Development Foundation as a scholarship to support
college students from Sanhao Township, encouraging
the academic development of young students.
45
RepoRt and accounts 2023 sustainability, environment and loCal Community (continued)
COMMUNITY INTERACTION
In August 2023, the local management helped to organise
a basketball match with the Zhangbei County Emergency
Management Bureau, fostering closer ties between Hebei
Hua Ao and the local community.
COMMUNITY CO-PROSPERITY
As well as providing local employment opportunities at the
Caijiaying mine, Hebei Hua Ao supports the revitalisation
of villages and community prosperity through road
construction and the provision of clean water supplies. In
2023, Hebei Hua Ao invested Rmb1,850,700 ($264,000)
in home repairs for villagers, subscribed Rmb700,000
($100,000) to a community fund to support infrastructure
development around the mine and donated a farm tractor
valued at Rmb80,000 ($11,000) to support the Sanhao
Township government in fighting poverty. In addition,
Hebei Hua Ao invested approximately Rmb2.4 million
($345,000) to rebuild the roads around the mine area,
with the support of the Zhangbei County government,
which improved travel for residents around the mine and
improved traffic safety.
SLAVERY
Whilst section 54 of the UK Modern Slavery Act 2015 does
not apply to Griffin Mining Limited, as it is incorporated
in Bermuda and does not do business in the United
Kingdom, Griffin seeks to comply with international best
practice as well as local legislation with regard, inter alia,
human rights and the environment. It will not deal with
any customer or supplier involved with slavery.
46
Griffin MininG LiMited 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 Limited to
financial returns provided by the Caijiaying Mine.
encompass this 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. As well as recognising the benefits
of increased metal prices as the world moves towards
EV economies, 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. 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.
47
RepoRt and accounts 2023 Corporate governanCe
The board of directors of Griffin has responsibility for
Two independent non-executive directors were appointed
setting the overall strategy of the Group, its performance,
to the Board in 2022 to join the Senior Independent
management and financial matters including, the approval
Director (“SID”), Clive Whiley. Independent directors
of budgets, significant capital expenditure and financial
therefore now constitute 50% of the Board. Dean Moore
reports. Key decisions are based on the regular review of
was appointed Chair of the Remuneration Committee
financial performance, capital and operational budgets and
and Linda Naylor is Chair of the Audit Committee. The
regular operational reports.
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 62
to 64.
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 on a quarterly basis, or as required, with all
members in attendance in 2023. The executive Chairman
leads the Board, and whilst not employed by the Company,
he 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 54). 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. The other executive
director is the full-time Finance Director. He is also the
Company Secretary and, although not in accordance with
best practice, it has not proved practicable to separate
shareholdings of these three non-executive directors are
less than 0.2% of the Company’s issued share capital
and they are free from any business or other relationship
which could materially interfere with the exercise of
their independent judgement. Adam Usdan is not an
independent non-executive director as he is also a major
shareholder.
The SID receives 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 the 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 SID supports the executive directors by
regularly communicating with the major shareholders,
other
shareholders
and potential
investors. The
Company updated its website during the year to improve
communication with stakeholders.
The Board
is supported by the Audit Committee
and Remuneration Committee. The reports of these
Committees are given on pages 51 to 55. A Nomination
Committee has not been formally established with, in
effect, the whole Board fulfilling this function.
these roles. Independent advice is sought where necessary
The existing board of directors brings a balance of skills
to supplement Mr Goodwin’s considerable experience and
and experience to the Company, including legal, financial,
corporate memory.
mining, geological and market expertise. Details of each
48
Griffin MininG LiMited director are given in the biographies on page 56. To
individual which it believes to be involved with slavery. The
reflect the Company’s commitment to sustainability,
Company has formal procedures regarding the avoidance
Linda Naylor has completed the ICAEW Sustainability
of bribery and corruption which are detailed further in
Certificate. All directors are subject to re-appointment
the Sustainability Review on page 29. The Group engages
annually at the annual general meeting of the Company’s
personnel regardless of race or gender.
shareholders.
Dal Brynelsen, a director of the Company’s Chinese
subsidiary with 40 years’ experience in the mining industry,
provides additional support to the Board.
The Chairman and Finance Director regularly visit the
Group’s operations to meet with management and other
personnel and communicate with them virtually on a daily
basis when not on site. The Board plans to meet at the
mine site in October 2024 to mark the 30th anniversary of
the Hebei Hua Ao Joint Venture.
A review of Board effectiveness is due to take place in 2024
when the issue of succession plans for the key executives
will also be addressed.
The safety of all personnel working at the Group’s
operations is a priority with formal procedures in place
to prevent and report any safety and environmental
The Company has appointed a Chief Operating Officer
who reports directly to the Chairman, who in turn reports
directly to the board of directors. The Chief Operating
Officer oversees the Group’s operations with individual
department heads reporting directly to him. The
Company has appointed a Chief Financial Officer in China
who reports to the Chief Operating Officer and directly
to the Finance Director, who in turn reports to the board
of directors. Individual department managers are able to
communicate directly to the Chairman concerning any
issues of concern.
The Company, through Hebei Hua Ao, has invested heavily
in the local community in China and continues to maintain
and further implement best practices for the protection
of the environment and for the benefit of the local
community. Further details are given on pages 29 to 46.
issues. The Group will not deal with any organisation or
Further details are provided on the Company’s web site.
49
RepoRt and accounts 2023 stakeholder engagement
Main Stakeholders
Key Issues
Communication and Feedback Channels
Government and regulatory
agencies
Implementation of laws, regulations
and policies.
Compliance with laws and regulations including
payment of taxes
Corporate governance and compliance
operation
Safety and environment protection
Daily communication and reporting
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
Suppliers and business
partners
Training and development
Staff representative conference
Health and safety
Regular safety reporting, safety inductions and
safety meetings
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
50
Griffin MininG LiMited
report oF the audit Committee
The Audit Committee assists the main board of directors
has unfettered access to employees of the Group and its
in its oversight of the Company’s financial reporting,
subsidiaries. The Audit Committee seeks to ensure all
internal control and risk management within the corporate
reporting is up to date and relevant to shareholders, to aid
governance framework.
their understanding of the Company and its performance.
The Chair is Linda Naylor, a Chartered Accountant with
sector experience. She is joined by Adam Usdan and Clive
Whiley, who both bring extensive fund management
and capital markets experience to benefit the work of the
Committee.
SIGNIFICANT ISSUE CONSIDERED BY
THE COMMITTEE IN RELATION TO
THE 2023 FINANCIAL STATEMENTS
The value of fixed assets and the need for any impairment
The Committee met three times in 2023 with all members
provisions based on the mine plan prepared by the COO
in attendance.
FINANCIAL REPORTING
The Audit Committee monitors the integrity of the
financial statements of the Group, including its annual
and interim reports, preliminary results and any other
formal announcement relating to its financial performance
whilst reviewing significant financial reporting issues and
judgements contained within those announcements before
recommending their approval to the Board. The Audit
Committee also reviews summary financial statements,
significant financial returns to regulators and any financial
information contained in certain other documents, such as
announcements of a price sensitive nature.
The Audit Committee reviews and challenges where
necessary:
and FD. The Committee considered the key judgements
made by management in relation to commodity prices and
production forecasts, operating and discretionary capital
expenditure assumptions, discount and exchange rates
as well as mineral reserves and resources estimates. The
Committee were satisfied with the key judgements made.
INTERNAL CONTROLS
The Audit Committee continued to keep the effectiveness
of the Company’s systems of internal control under review.
The Committee monitors and reviews the budget prepared
each year for approval by the Board. Actual performance
against budget is presented in the monthly management
accounts with explanations for significant variances. There
is no internal audit function due to the size of the Group
and the current level of internal controls are considered
to be adequate. Monitoring of internal controls also takes
a) The consistency of, and any changes to, accounting
place through the external audit and any recommendation
policies, both on a year on year basis and across the
for improvements are implemented.
Company and its Group;
b) The methods used to account for significant or unusual
RISK MANAGEMENT SYSTEMS
transactions where different approaches are possible;
c) Whether
the Group has
followed appropriate
accounting standards and made appropriate estimates
and judgements, taking into account the views of the
external auditor;
d) The clarity of disclosure in the Group’s financial
reports and the context in which statements are made;
and
e) All material information presented with the financial
statements, such as the operating and financial review
and the corporate governance statement (insofar as it
relates to the audit and risk management).
The Audit Committee monitors and reviews management’s
approach to risk management, including the process of
identification of emerging risks and their mitigation. The
risks and process of identification is then further scrutinised
and approved by the Board as a whole.
WHISTLE BLOWING
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
In order to fulfil these duties, the Audit Committee receives
independent investigation of such matters and appropriate
regular financial and other reports from management and
follow up action.
51
RepoRt and accounts 2023 report oF the audit Committee (continued)
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
c) Meets with the external auditors, 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 auditors at least once a year, without
management being present, to discuss their remit and
any issues arising from the audit;
auditor. The Audit Committee oversees the selection
d) Reviews and approves the annual audit plan and
process for new auditors and if the auditors resign the
Audit Committee shall investigate the issues leading to
this and decide whether any action is required;
ensures that it is consistent with the scope of the audit
engagement and the materiality is appropriate;
e) Reviews the findings of the audit with the external
b) Oversees the relationship with the external auditors
auditors. This includes but is not limited to, the
including (but not limited to):
following:
(i) Approval of their remuneration, whether fees for
(i) Discussion of any major issues which arose during
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 auditors’ independence
and objectivity taking into account relevant
national, professional and regulatory requirements
and the relationship with the auditors as a whole,
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 auditors before they are signed by
management;
(h) Reviews the management letter and management’s
response to the auditors’ findings and recommendations;
including the provision of any non-audit services;
and
(i) Develops and implements a policy on the supply of
non-audit services by the external auditors, taking into
account any relevant ethical guidance on the matter.
Linda Naylor
Chair of the Audit Committee
14 May 2024
(iv) Satisfying itself that there are no relationships
(such as
family, employment,
investment,
financial or business) between the auditors 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 auditors,
then monitoring
the
implementation of this policy;
(vi) Monitors the auditors’ compliance with relevant
ethical and professional guidance on the rotation
of audit partners, the level of fees paid by the
Company compared to the overall fee income
of the firm, office and partner and other related
requirements; and
(vii) Annual assessment of the auditors’ qualifications,
expertise and resources and the effectiveness of
the audit process which shall include a report
from the external auditors on their own internal
quality procedures;
52
Griffin MininG LiMited 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.
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
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;
Committee is also responsible for the review of, and making
• Total incentive-based rewards will be earned through
recommendations to, the board of directors in connection
the achievement of performance conditions consistent
with share option plans and performance related pay and
with shareholder interests;
their associated targets and for the oversight of employee
benefit structures across the Group.
• The design of long-term incentives will be prudent and
will not expose shareholders to unreasonable financial
Apart from the Finance Director, all the other executives
risk;
engaged by the Griffin Group are either employed
•
In considering the market positioning of reward
by operating subsidiaries or independent contractors
elements, account will be taken of the performance of
(contracting through professional service companies).
the Group and of each individual executive director;
Almost all of these executives or service companies are
and
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.
• 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.
DIRECTORS’ REMUNERATION POLICY
This has included the services of FIT Remuneration
With only one executive director in the Group, the
Remuneration Committee has determined that it would
be inflexible, bureaucratically cumbersome and therefore
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.
53
RepoRt and accounts 2023 report oF the remuneration Committee (continued)
Long-term performance is incentivised by way of the grant
In recognition of the services provided by Keynes Capital
of shares and share purchase options.
and, in particular, increases in production at Caijiaying, a
The Board seeks to strengthen the alignment of director,
employee and shareholder interests.
Executive directors’ remuneration for 2023
In 2023, Roger Goodwin (Finance Director and Company
Secretary) received a basic salary of £350,000 ($433,000)
(2022: £341,250 ($422,000)), bonus of £30,000 ($37,000)
(2022: £87,873 ($108,000)); and pension contributions of
£30,000 (37,000) (2022: £30,000 (37,000)). In addition, he
received directors’ fees of $209,000 (2022: $219,000) 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
bonus of £220,000 ($272,000) (2022: £600,000 ($742,000))
was awarded to Keynes Capital in 2023.
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
companies of $209,000 in 2023 (2022: $219,000).
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 entitled
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.
entity, Keynes Capital, being the registered business
On 6 February 2015, the Board resolved to adopt a new
name of Keynes Investments Pty Limited as trustee
share option scheme (the “30 pence options”) over a total
for the Keynes Trust. In addition to the services of the
of 20,000,000 new ordinary shares in the Company, all of
Chairman, Keynes Capital provides supporting services
which subsequently vested. Each 30 pence option entitled
to the Company in Australia, including support staff and
the holder to subscribe for new ordinary shares in the
offices. The Chairman, Mladen Ninkov, is a director and
Company at an exercise price of 30 pence per new ordinary
employee of Keynes Investments Pty Limited.
share on or before 31 December 2020 subsequently
Under a consultancy agreement with the Company, Keynes
extended to 31 December 2023.
Capital received fees of $2,994,000 (2022: $3,367,000) in
An offer was made on 30 December 2022 to all option
2023, for the provision of advisory and support services
holders for the purchase and cancellation of outstanding
including office premises, staff and consultants to Griffin
options over 19,520,000 shares in the Company (“the
and its subsidiaries.
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
individuals, and having further considered the services
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.
provided by Keynes under its consultancy agreement with
In March 2023 the Company implemented a Share
the Company, the Keynes Capital consultancy agreement
Incentive Plan (the “Plan”), to retain vital key Company
with the Company was renewed on 1 January 2024 for
personnel, in particular, Mladen Ninkov. On 4 April
a further year on the same terms, under which fees of
2023 7,805,000 shares were issued under the terms of the
£2,200,000 per annum are payable to Keynes Capital,
Plan, including 6,000,000 new ordinary shares to Mladen
together with a bonus of one years fees in 2024.
Ninkov, Chairman. Following this issue Mladen Ninkov
54
Griffin MininG LiMited has an interest in 6,033,001 shares in the Company,
1,350,000 shares in the Company at 88 pence per share
representing 3.1% of the Company’s issued share capital.
to the Company as part of the Company’s share buy-back
The new Ordinary Shares issued are subject to certain
programme.
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 returned pro
Following the exercise of options by Roger Goodwin there
are no share purchase options outstanding.
NON-EXECUTIVE DIRECTORS.
rata upon leaving the employment of the Company or its
The non-executive Directors’ fees were last reviewed in
subsidiaries before 31 December 2024.
March 2022 and held at £66,125 ($82,000) per annum.
On 31 December 2023, Roger Goodwin exercised
Since 1 April 2022 Clive Whiley has been engaged to
options over 1,500,000 new ordinary shares in the
provide 25% of his time for consultancy services to the
Company exercisable at 30 pence per share and
Company, being in addition to that expected of him as a
over 500,000 new ordinary shares in the Company
director of the Company, at a rate of £20,000 ($25,000)
exercisable at 40 pence per share. These shares were
per month subject to UK PAYE, in addition to his non-
issued and admitted to trading on 8 January 2024. On
executive fees of £66,125 ($82,000) per annum., on a
12 January 2024, Roger Goodwin completed the sale of
rolling 90 day termination notice period.
Total Directors’ Remuneration
The table below sets out the total remuneration payable to the Directors, in USD000s:
Fees Salary
Pension Total
2023
contributions
Fees
Salary
Pension
Contributions
$000
$000
$000
$000
$000
$000
$000
Mladen Ninkov*
Roger Goodwin
Dal Brynelsen
(resigned 5 May 2022)
Dean Moore
Linda Naylor
Adam Usdan
Clive Whiley
209
209
-
470
-
-
-
-
-
82
82
82
378
Key personnel
60
2,301
1,042
470
-
37
-
-
-
-
-
209
716
-
82
82
82
378
37
18
1,549
2,379
219
219
66
53
53
83
295
988
70
Total
1,102
2,771
55
3,928
1,058
-
556
-
-
-
-
-
556
1,841
2,397
-
37
-
-
-
-
-
37
-
37
Total
2022
$000
219
812
66
53
53
83
295
1,581
1,911
3,492
* Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received
fees under a consultancy agreement of $2,994,000 (2022: $3,367,000), 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 2023.
Dean Moore
Chair of the Remuneration Committee
14 May 2024
55
RepoRt and accounts 2023
direCtors, griFFin mining ltd
Mladen Ninkov, Chairman, holds a Master of Law Degree
Linda Naylor, Non-executive Director, is a graduate
from Trinity Hall, Cambridge and Bachelor of Laws (with
of the London School of Economics and a Fellow of the
Honours) and Bachelor of Jurisprudence Degree from the
Institute of Chartered Accountants in England & Wales. A
University of Western Australia. He is the principal of
former partner in Grant Thornton UK LLP, her experience
Keynes Capital. He has a mining, legal, fund management
has been gained over more than twenty years working as
and investment banking background and is admitted as a
a Nominated Adviser in the Capital Markets team and
barrister and solicitor of the Supreme Court of Western
as an Audit Partner specialising in the natural resource
Australia. He was the Chairman and Managing Director of
sector. She was Chair of the Audit Committee whilst a
the Dragon Capital Funds management group, a director
Governor of Portsmouth University. As Finance Director
and Head of International Corporate Finance at ANZ
of AIM listed Chaarat Gold Holdings Limited from 2009
Grindlays Bank Plc in London and a Vice President of
to 2018, she worked as part of a small executive team. Her
Prudential-Bache Securities Inc. in New York. He also
responsibilities encompassed financial reporting, investor
worked at Skadden Arps Slate Meagher & Flom in New
relations and fund raising as that company transitioned
York and Freehill Hollingdale & Page in Australia. He has
from gold explorer to developer in the Kyrgyz Republic.
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
Roger Goodwin, Finance Director, is a Fellow of
Northwestern University with majors in Finance, Marketing,
the Institute of Chartered Accountants in England and
and Accounting, and a BA in English from Wesleyan
Wales. He has been with the Company since 1996 having
University. He is the President of Trellus Management
previously held senior positions in a number of public and
Company LLC, an equity hedge fund based in the USA.
private companies within the natural resources sector. He
Mr Usdan founded Trellus Management in January 1994
has a strong professional background, including that as a
and has been in the investment advisory industry for over
manager with KPMG, with considerable public company
30 years. Mr Usdan began his investment career in 1987 at
and corporate finance experience and experience of
Odyssey Partners where he was responsible for managing
emerging markets.
long/short U.S. equity (small to mid-cap) pools of capital.
Dean Moore, Non-executive Director, is a Fellow of the
Clive Whiley, Non-executive Director, has some
Institute of Chartered Accountants in England & Wales
forty years’ experience in regulated and listed company
with extensive public company experience having previously
governance positions, both as an executive and non-
been Chief Financial Officer at Cineworld Group plc, N
executive director, across a wide range of industries and
Brown Group plc, T&S Stores plc and Graham Group plc
geographies, including extensive business experience in
and formerly non-executive Chairman of Tuxedo Money
the People’s Republic of China since becoming a member
Solutions Limited. He is currently a non-executive director
of the London Stock Exchange in 1983. Mr Whiley is
and interim Chief Financial Officer at De La Rue Plc and
currently Chairman of Mothercare Plc, China Venture
Chair of the Audit and Remuneration Committees of
Capital Management Limited, De La Rue Plc, First China
THG plc.
Venture Capital Limited, Y-LEE Limited, and a non-
executive Director of Sportech Plc.
56
Griffin MininG LiMited subsidiary direCtors and senior exeCutives
direCtors
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
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.
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 Limited, an ASX
listed company with mineral interests in China. Prior to
that he was the General Manager for Guangxi Golden
Tiger Mining JV, a Sino-Australian JV gold company
focussed on Guangxi, China, controlled by Golden Tiger
Mining NL, an ASX listed company. He has also worked as
the Senior Geologist for Silk Road Resources (a TSX listed
company), responsible for evaluating various gold properties
in Gansu Province in central western China. Dr Zhou has
considerable experience in the Chinese resources sector.
senior exeCutives
John Steel, Chief Operating Officer, is a graduate
and AIG, Member of SocEcGeol. He is fluent in
Mining Engineer from the Ballarat School of Mines and
Mandarin Chinese with special emphasis on geological
holds a Master of Business Administration from Deakin
and mineral industry terms. Prior to joining Griffin he
University. He is a member of the Australian Institute of
was Principal Geologist for Mining Associates, providing
Mining and Metallurgy. John has extensive global mining
competent person services to inter alia the Hong Kong
experience including over a decade of in site operational
Stock Exchange; Vice President Exploration for RH
expertise with tier one companies in Australia, Canada
Mining Resources Limited; Business Development
(Xstrata Mining PLC) and the Middle East (Barrick
Manager Exploration East Asia for Sandvik Mining and
Gold Corporation). John also has extensive supplier side
Construction; JV General Manager Dragon Mountain
experience holding country Managing Director positions
Gold in China; Exploration Manager, Lotus Resources
in Norway (EPC Groupe) as well as General Manager
plc in Mongolia; Chief Representative for Centerra Gold
positions with several explosive and technology service
Inc in China; President and Exploration Manager for
providers within Australia.
Wendy Zhang, Chief Financial Officer, Hebei Hua
Ao, holds a Master of Accounting degree from Macquarie
University, is a member of the Certified Practising
TVI Pacific China; Hunan Pacific Geological 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
Chinese Institute of Certified Public Accountants. She
a graduate of Curtain University of Western Australia
spent 4 years as Financial Controller for Golden Tiger
with over 30 years’ experience covering mining geology,
Mining’s joint venture operations in China. Previously
mine management, corporate roles, project development,
she was Chief Accountant for Shanghai Silk Group and
project evaluation and exploration management. His career
subsequently Ann Taylor Shanghai.
has taken him across Australia and Asia to a diverse range
Glenn Sheldon, China Zinc Limited, Business
Development Manager, is a geologist holding a BSc
from Adelaide University. He is a Fellow of the AusIMM
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.
57
RepoRt and accounts 2023 58
Griffin MininG LiMited Tailings Storage Facilities 3 and 4 with Caijiaying Mine in background
59
RepoRt and accounts 2023 direCtors’ report
The Directors submit their report together with the audited consolidated financial statements of Griffin Mining Limited (“the
Company”) together with its subsidiaries (“the Group”) for the year ended 31 December 2023.
FINANCIAL RESULTS
The Group profit before taxation for 2023 amounted to $24,486,000 (2022: $15,272,000). Taxation of $9,250,000 (2022:
$7,568,000) has been provided. No dividends were paid in 2023 (2022: $nil). $15,236,000 has been transferred to reserves
(2022: credited $7,704,000).
The basic earnings per share amounted to 8.03 cents (2022: earnings 4.41 cents). The attributable net asset value per share at
31 December 2023 amounted to 140 cents (2022: 140 cents).
Whilst the directors do not recommend the payment of a dividend at this time, all possible alternatives will be considered in
2024 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 2023 and the indication of likely future developments are set out on pages 8 to 47.
DIRECTORS
The Directors of the Company during the year were:
Mladen Ninkov – Australian – Chairman
Roger Goodwin – British – Finance Director
Dean Moore – British – Non-executive director
Linda Naylor – British – Non-executive director
Adam Usdan – American (USA) – Non-executive director
Clive Whiley – British – Non-executive director
The beneficial interests of the Directors holding office at 31 December 2023 and their immediate families in the share capital
of the Company were as follows:
Name
At 31 December 2023
At 1 January 2023
or on date of appointment
Ordinary
Options over ordinary
shares, number shares, number exercisable at
40 pence
30 pence
Ordinary
shares, number
Mladen Ninkov
6,033,001
Roger Goodwin*
Dean Moore
Linda Naylor
877,830
100
20,000
Adam Usdan**
29,209,348
Clive Whiley
100,100
-
-
-
-
-
-
-
-
-
-
-
-
33,001
877,830
100
20,000
29,209,348
100,100
Options over ordinary
shares, number exercisable at
40 pence
30 pence
-
-
1,500,000
500,000
-
-
-
-
-
-
-
-
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.
60
Griffin MininG LiMited
* On 31 December 2023, Roger Goodwin exercised options over 1,500,000 new ordinary shares in the Company exercisable
at 30 pence per share and over 500,000 new ordinary shares in the Company exercisable at 40 pence per share. These shares
were issued and admitted to trading on 8 January 2024. On 12th January 2024, Roger Goodwin completed the sale of
1,350,000 shares in the Company at 88 pence per share, following which he holds 1,527,830 Ordinary Shares in the Company
representing 0.8% of the issued share capital of the Company.
** Mr. Adam Usdan is interested in 28,794,878 shares in Griffin representing 15.6% of the Company’s issued share capital,
7,960,221 of which are held directly with the remaining 20,834,657 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 have now vested and have been exercised . Each 40 pence option entitled 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 2023.
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 have vested and have been exercised. Each 30 pence option entitled 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 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.
In March 2023 the Company implemented a Share Incentive Plan (the “Plan”), to retain vital key Company personnel, in
particular the Chairman, Mladen Ninkov. On 4 April 2023 7,805,000 shares were issued under the terms of the Plan, including
6,000,000 new ordinary shares to Mladen Ninkov. Following this issue Mladen Ninkov has an interest in 6,033,001 shares in
the Company, representing 3.1% of the Company’s issued share capital. 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 returned pro rata upon leaving the employment of the Company or its subsidiaries before 31 December 2024.
SHARE BUYBACK
On 12 September 2023, the Company announced that in light of the severely undervalued nature of the Company’s share
price, the cash generated by operations in conjunction with the available funds available outside of China to Griffin and the
current depressed nature of base metals prices and the share prices of those producers, the Directors resolved to renew efforts
to successfully effect the share buy-back programme announced on 25 February 2021 (the “Buy-Back Programme”) to return
excess monies not required to meet financial and working capital requirements to shareholders. The directors have since
extended the buy-back programme to 26 August 2024 to purchase up to 10 million shares and up to a value of $10 million, and
provided sufficient funds are available, they may seek to extend the buy-back programme in the same terms again.
In addition to the Buy-Back Programme, the directors reserved the right (subject to compliance with applicable law) to:
1) purchase large blocks of shares from individual shareholders where the large number of such shares offered in the market
may cause instability in the Company’s share price; and
2) purchase a larger number of shares via a tender offer which would be the subject of further documentation being sent to
non-US resident shareholders.
61
RepoRt and accounts 2023 direCtors’ report (continued)
On 5 January 2024 the Company entered into trades committing to purchase, through its joint broker Joh. Berenberg, Gossler
& Co. KG, 8,886,128 of the Company’s own ordinary shares (“Ordinary Shares”), representing 4.6% of the Company’s issued
share capital (excluding shares already held in treasury), at a price of 88 pence per Ordinary Share, for a total consideration
of £7,819,792 ($9,672,000), excluding brokers fees, (the “Transaction”). The Transaction was conducted separately from the
Company’s latest share buyback programme.
On 15 March 2024, 10,297,943 ordinary shares in the Company purchased under share buyback programmes were cancelled.
Following the cancellation of these shares, there are now 184,530,477 ordinary shares in issue with no outstanding options
or warrants.
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 controlling undertakings held an interest in 26,513,657 ordinary shares in the
Company representing 15.227% of the Company’s then issued share capital. On 5 January 2024 he sold 112,500 shares in
the Company as part of the buyback Transaction; and
- On 1 March 2021 Richard Griffiths and controlling undertakings held an interest in 24,313,224 ordinary shares in the
Company representing 13.93% of the Company’s then issued share capital, together with voting rights through financial
instruments equating to 3.34% of the Company’s then issued share capital. On 5 January 2024 he sold 7,423,628 shares in
the Company as part of the buyback Transaction.
PRINCIPAL RISKS AND UNCERTAINTIES
Risk
Comment
Business
Impact
Mitigation
Economic Risk
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.
Exposure to
fluctuations in the
Renminbi / US
dollar exchange rate.
A fall in the value of the Renminbi would
reduce the US dollar value of revenues,
whilst an increase in the value of Renminbi
would increase operating costs.
Moderate
The Renminbi is loosely pegged to the
US dollar. Management continually
reviews foreign exchange rates and the
appropriateness of hedging.
Country Risk
Exposure to
political and social
risks in the PRC.
Exposure to
changes in fiscal
and regulatory
regime.
Low
High
Griffin’s primary assets are located in the
PRC and therefore exposed to any adverse
changes in the political and social situations
there.
to political/social
is exposed to changes
risks,
In addition
the Group
in
permitting, environmental, health and
safety, and tax regulations in the PRC
which may result in a more challenging,
or costly, operating environment.
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.
62
Griffin MininG LiMited prinCipal risks and unCertainties Continued
Risk
Comment
Business
Impact
Mitigation
Operational Risk
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 to mining
hazards
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 foreman
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
and environmental Bureaus.
Low
High
Reliability of Mineral
Resources and Ore
Reserves
The calculation of Mineral Resources
and Ore Reserves involves significant
assumptions and estimates that may
prove inaccurate.
Mine fatality
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.
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.
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
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.
Licence administration Griffin,
its
through
subsidiary
companies, holds a number of mining,
exploration and other
licences and
permits to operate. These normally
ongoing
include
operation and require periodic renewal.
Renewals are not guaranteed.
conditions
for
Moderate
High
It is the Company’s policy to pursue
growth opportunities through expansion
in the Caijiaying area, as well as reviewing
acquisition opportunities which can be
shown to be value accretive.
All licensing requirements are kept
under review with operational staff
liaising with local PRC authorities to
ensure conditions are adhered to and
applications made timely and in good
order.
63
RepoRt and accounts 2023 direCtors’ report (continued)
prinCipal risks and unCertainties Continued
Risk
Comment
Key management
The management of Caijiaying is reliant
on a small number of key executives,
notably the Chairman, both
inside
and outside of the PRC. Their death,
retirement or departure may have
significant effect on the operations of
the Company.
Business
Impact
High
Mitigation
Griffin has contractual arrangements
with all key employees which are
renewed on a regular basis.
Geological and
Historical Information
The loss of historical and/or geological
information would have
a very
significant impact on the operations of
the Company.
Low
Bribery and
Corruption.
Moderate
Whilst strict
internal policies and
procedures to ensure compliance with
applicable laws are applied to prohibit
all forms of bribery and corruption
the risk remains that employees or
contractors have circumvented these
policies and procedures which could
result in prosecution of the Group and
its officers.
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
Climate Change
Climate change may have an impact on
operations and demand for metals
Low
Griffin has instituted a complete back
up system relating to all geological and
operational data in Perth, Western
Australia, with ERM formerly CSA
Global. It is updated on a daily basis.
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.
Griffin studies the possible impact
of climate change on operations,
identifying risks that may interrupt
operations and develops measures to
counter these.
POST BALANCE SHEET EVENTS AND GOING CONCERN
On 15 March 2024, 10,297,943 ordinary shares in Griffin Mining Limited (“the Company”) purchased under share buyback
programmes were cancelled. Following the cancellation of these shares, there are now 184,530,477 ordinary shares in issue
with no outstanding options or warrants. Otherwise there were no significant post balance sheet events requiring adjustment
to the financial statements or disclosure.
64
Griffin MininG LiMited 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 and Life of Mine Plan to adapt to changing situations, including that relating to climate
change, 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 78.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP were re-appointed auditors at the Annual General Meeting of the Company held on 7 July
2023 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 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
14 May 2024
65
RepoRt and accounts 2023 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 2023 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 2023 (the “Annual Report”), which
comprise: the Consolidated Statement of Financial Position as at 31 December 2023; the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, and the Consolidated
Cash Flow Statement for the year then ended; and the notes to the financial statements, which include a description of the
material accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
basis For opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
our audit approaCh
Overview
Materiality
• Overall Group materiality: $1.2 million (2022 : $1.1 million), based on 5% of the 3-year average
profit before tax.
• Performance Group materiality: $0.9 million (2022: $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. Seven of the entities within the Group were
financially inconsequential to the Group.
• This enabled us to obtain 100% coverage of consolidated revenue, 99% coverage of consolidated
profit before tax and 99% coverage of total assets for the Group.
Key Audit Matters •
Impairment assessment of property, plant and equipment.
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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.
COVID-19 and Extension of the business licence were key audit matters in the prior year, but are now removed on the basis
that they are not considered sufficiently significant to this year’s audit. Otherwise the key audit matters below are consistent
with last year.
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 12, Property, Plant and Equipment.
performed the following audit procedures:
As at 31 December 2023, the carrying value of the mining
- we met with, and obtained written correspondence
assets totalled $250.4 million.
As disclosed in Note 12, management assessed the mining
assets for
impairment
indicators and concluded that
there were no impairment indicators as at 31 December
2023; accordingly, there is no requirement to perform an
impairment test. Notwithstanding this, management has
undertaken such an assessment based on the new life of mine
plan in line with good practice and governance as well as in
line with their established internal policy. As a result, we
have reviewed management’s assessment.
from, management’s external legal advisors to obtain
evidence that the conversion of the legal structure of
the existing joint venture, and therefore extending the
term of the business licence, will be routine in nature
and that no additional costs will be incurred;
- we understood and evaluated management’s processes
and controls in respect of the impairment trigger
assessment process;
- we evaluated and challenged management’s assessment
and judgements including ensuring that the impact
of climate change, and recent commodity price
The 2023 life of mine plan, which includes extraction
and foreign exchange volatility, were appropriately
of resources from Zone II and Zone III, extends to 2050.
considered in management’s impairment assessment
Under the terms of the Group’s current joint venture
and conclusions.
agreement with Zhangjiakou Caijiaying Lead Zinc Mining,
the Group’s business licence will expire in 2037. The joint
venture agreement will legally convert into a limited liability
company by 1 January 2025.
Management prepared a detailed cash flow model on a
FVLCD basis to estimate the recoverable amount.
Our procedures in respect of the impairment model
included:
-
verifying the integrity of formulae and the mathematical
accuracy of management’s valuation model;
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RepoRt and accounts 2023 independent auditors’ report to the members oF
griFFin mining limited
key audit matter (continued)
how our audit addressed the key audit matter
(continued)
Judgement is needed as to whether this conversion to a
-
consideration of the impact of the latest life of mine
limited liability company would enable an extension of
plan assumptions and ensuring that the impairment
the term of the business licence as a matter of routine,
model reflected the latest plans;
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.
Management has appointed legal advisors to convert the
joint venture agreement to a limited liability company.
Based on legal advice management expects to be able to
extend the term of the business licence as a matter of routine
-
assessing the reliability of management’s forecast
capital and operating expenses with reference to
comparing budgeted results with actual performance
in prior periods;
- using our independent valuation experts to assist us
in evaluating the appropriateness of the discount rate
used and whether it fell within a reasonable range
taking into account external market data;
and at no additional cost, and therefore has concluded it is
- benchmarking management’s
forecast commodity
reasonable to assume the life of mine goes out to 2050.
price and foreign exchange assumptions against our
own collated consensus data to assess whether they fell
within an external analyst range;
-
assessing whether
the
assumptions had been
determined and applied on a consistent basis, where
relevant, across the Group;
-
assessing the disclosure made over the impairment
assessment and the sensitivities within Note 12 of
the financial statements and challenging management
where any inconsistencies were noted.
We did not identify any significant issues through our
work performed.
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, the timing and approval
of future capital expenditure, the most appropriate discount
rate and foreign exchange rate. Estimation uncertainty is
considered to be significant due to the long lives of the
assets and uncertainty in the quantum and timing of cash
flows, including the uncertain impact of climate change
on the Group’s operations, as described in Note 12 to the
financial statements.
We focused on this area due to the material nature of the
balance and the estimates and judgements involved in the
impairment indicator assessment.
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.
68
Griffin MininG LiMited independent auditors’ report to the members oF
griFFin mining limited
Our Group audit scope focused primarily on the Caijiaying zinc mine in China, which was subject to a full-scope audit by
the local 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, 99% coverage of consolidated profit before tax and 99% coverage of total assets for the Group.
To ensure sufficient oversight of the Chinese component audit, the Group team performed a number of procedures throughout
the audit to direct and oversee the audit approach. This included travelling to Beijing to visit the mine site with management
and our local team, performing in-person file reviews, holding regular dialogue via video conference calls and other forms
of communication as considered necessary to satisfy ourselves as to the appropriateness of audit work performed by the
component audit team.
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.
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
$1.2 million (2022: $1.1 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 $1,000,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $60,000
(2022: $55,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
69
RepoRt and accounts 2023 independent auditors’ report to the members oF
griFFin mining limited
ConClusions relating to going ConCern
Our evaluation of the Directors’ assessment of 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;
• Obtaining evidence from the Group’s external legal advisors that the conversion of the legal structure of the joint venture
into a limited liability company by 1 January 2025 will not negatively impact the cash flows of the Group over the going
concern period;
• 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
70
Griffin MininG LiMited independent auditors’ report to the members oF
griFFin mining limited
being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
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 and
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; and
•
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
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
71
RepoRt and accounts 2023 independent auditors’ report to the members oF
griFFin mining limited
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 Alex Lazarus.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 May 2024
72
Griffin MininG LiMited
Consolidated inCome statement
For the year ended 31 December 2023
(expressed in thousands US dollars)
Revenue
Cost of sales
Gross profit
Notes
2023
$000
2022
$000
2
2
146,023
94,397
(94,181)
(56,145)
51,842
38,252
Administration expenses
2 & 3
(28,005)
(22,627)
Operating Profit
Losses on disposal of plant and equipment
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)
23,837
15,625
6
7
8
9
(784)
(136)
1,394
(177)
352
24,486
10
(9,250)
15,236
8.03
7.98
11
11
(404)
(387)
369
(135)
204
15,272
(7,568)
7,704
4.41
4.11
The above Consolidated Income Statement should be read in conjunction with the notes on pages 78 to 101.
73
RepoRt and accounts 2023
Consolidated statement oF Comprehensive inCome
For the year ended 31 December 2023
(expressed in thousands US dollars)
Profit for the year
Other comprehensive income / (expense) that will be reclassified to profit or loss
2023
$000
15,236
2022
$000
7,704
Exchange differences on translating foreign operations
(2,912)
(15,498)
Other comprehensive (expense) for the year, net of tax
(2,912)
(15,498)
Total comprehensive income / (expense) for the year
12,324
(7,794)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the notes on pages 78
to 101.
74
Griffin MininG LiMited
Consolidated statement oF FinanCial position
As at 31 December 2023
(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
Lease Liabilities
Current liabilities
Trade and other payables
Lease Liabilities
Business taxation payable
Total current liabilities
Notes
2023
$000
2022
$000
12
13
14
15
16
17
18
19
21
23
24
25
26
27
26
250,370
258,041
575
1,554
407
1,494
252,499
259,942
5,828
2,886
60,007
68,721
8,077
3,433
34,138
45,648
321,220
305,590
1,928
78,550
3,690
3,109
(2,017)
3,529
(29,346)
(3,480)
213,789
269,752
3,106
3,929
-
570
7,605
38,308
169
5,386
43,863
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
44,910
169
2,680
47,759
Total equities and liabilities
321,220
305,590
Attributable net asset value per share to equity holders of parent
28
1.40
1.40
The above Consolidated Statement of Financial Position should be read in conjunction with the notes on pages 78 to 101.
The financial statements on pages 73 to 101 were approved by the Board of Directors and signed on its behalf by:
Mladen Ninkov
Chairman
14 May 2024
Roger Goodwin
Finance Director
75
RepoRt and accounts 2023
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T
Griffin MininG LiMited
Consolidated Cash Flow statement
For the year ended 31 December 2023
(expressed in thousands US dollars)
Net cash flows from operating activities
Profit before taxation
Share based payments
Foreign exchange losses
Finance income
Finance costs
Depreciation
Losses on disposal of equipment
Decrease / (increase) in inventories
Decrease / (increase) in receivables and other assets
(Decrease) in trade and other payables
Taxation paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
(Costs) on disposal of equipment
Payments to acquire – mineral interests and mine development
Payments to acquire – property, plant, and equipment
Payments to acquire - office lease, furniture & equipment
Payments to acquire - intangible fixed assets – exploration interests
Notes
7
8
12
7
12
12
13
2023
$000
24,486
3,019 -
136
(1,394)
177
28,026
784
2,249
547
(415)
(9,238)
48,377
1,394
(263)
(16,792)
(6,056)
-
(168)
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)
Net cash outflow from investing activities
(21,885)
(20,932)
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
Lease repayments including interest
Net cash outflow from financing activities
- -
(27)
(373) -
4,271 -
(4,271)
(155)
(555)
-
-
(167)
(167)
Increase / (decrease) in cash and cash equivalents
25,937
(5,365)
Cash and cash equivalents at the beginning of the year
Effects of foreign exchange rates
Cash and cash equivalents at the end of the year
34,138
(68)
60,007
38,159
1,344
34,138
The above Consolidated Cash flow Statement should be read in conjunction with the notes on pages 78 to 101.
77
RepoRt and accounts 2023
notes to the FinanCial statements
1. basis oF aCCounting
The financial statements of Griffin Mining Limited (“the Company”) 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 material 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 2023:
•
Insurance Contracts IFRS 17;
• Definition of Accounting Estimates - amendments to IAS 8;
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction - amendments to IAS 12; and
• Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2.
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 2023, 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.
•
International Tax Reform - Pillar Two Model Rules - amendments to IAS 12.
going ConCern
The financial statements have been prepared on a going concern basis. The Group regularly prepares cash flow forecasts and
revises its budgets and Life of Mine Plan to adapt to changing situations including that relating to climate change, 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 imposed by the Chinese authorities during politically
sensitive periods and to contain outbreaks of Covid-19 or other pandemic. 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. However, a three month suspension has been built into the cash flow forecasts on a severe case scenario in the
second half of 2024.
The directors have considered that Hebei Hua Ao will be converted to a limited liability company with a new business licence
by 31 December 2024 enabling Hebei Hua Ao to continue as a going concern. On the aforementioned bases the board of
directors consider the Group will be able to meet its liabilities as they fall due for at least 12 months from the date of this report
and have prepared the financial statements on a going concern basis.
Consolidation basis
The Group financial statements consolidate the financial statements of the Company and all its subsidiary undertakings drawn
up to 31 December each year. Subsidiaries are entities over which the Group has the power to control the financial and
78
Griffin MininG LiMited notes to the FinanCial statements
Consolidation basis (continued)
operating policies so as to obtain benefits from their activities. The Group obtains and exercises control through voting rights.
Management has assessed its involvement in Hebei Hua Ao and Hebei Sino Anglo in accordance with IFRS 10 and concluded
that it has control.
In making its judgement, management considered the Group’s voting rights, the relative size and dispersion of the voting
rights held by other shareholders and the extent of recent participation by those shareholders in general meetings.
Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements
of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
revenue
Revenue is measured by reference to the fair value of consideration received or receivable by the Group and comprises amounts
received, net of VAT and production royalties, from sales of metal concentrates to third party customers. Sales are recognised
on a delivery 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 12).
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 - 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 and office equipment - over 5 years on a straight line basis with a 10%
residual value.
79
RepoRt and accounts 2023 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 (cash
generating unit) 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 or 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. Estimates and assumptions used in determining whether an asset has become impaired are set out in note 12.
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
• Capital expenditure: Development meterage at mining cost rates plus sustaining plant and equipment
• Commodity prices: Current market and expectations of longer term price estimates and deductions for smelter treatment
charges
• 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 24) 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
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.
•
•
•
80
Griffin MininG LiMited notes to the FinanCial statements
FinanCial assets (continued)
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”).
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.
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 16 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.
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.”
81
RepoRt and accounts 2023 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 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.
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 such as shares issued under a share incentive
scheme subject to clawback and share options subject to exercise.
• “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 reserve 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.
• “Shares held in treasury” represents ordinary shares in the Company Shares bought in at cost of purchase.
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 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.
82
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 shares or share options awarded. Their
value is appraised at the share issue or option 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. In the case of shares issued subject to clawback, the
expense is allocated over the period from issue to end of the clawback period with an initial credit to share capital and balancing
credit to share based payments. At the end of the clawback period the allocation to share based payments is released to share
premium.
Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from
previous estimates, or if any shares granted under share incentive schemes are to be clawed back. Any cumulative adjustment
prior to vesting is recognised in the current period.
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 2023 the total expense recognised in profit or loss arising from share based
transactions was $3,019,000 (2022: 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 required 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 by
31 December 2024.
Impairment review assumptions, exploration interests (note 13). Impairments are assessed by reference to exploration results
carried out in an area of interest. Where such exploration indicates that there are no indications of mineralisation within
the area of interest, provision is made for impairment in value. Non-impairment of assets is conditional upon continued
exploration licences and permits which the directors consider will be maintained or obtained as appropriate.
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 $3,903,000 (2022 $2,399,000) are included
in net operating costs rather than attributable to non-controlling interests. Likewise, the amounts due at 31 December 2023 of
$4,697,000 (2022: $3,237,000) are included in other payables rather than due to non-controlling interests within equity within
the Consolidated Statement of Financial Position.
83
RepoRt and accounts 2023 notes to the FinanCial statements
signiFiCant judgements and estimates (continued)
Estimates
Impairment review assumptions, property, plant and equipment (note 12). 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 cash generating 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.
•
future zinc treatment costs.
•
future operating and capital expenditure.
• discount rates.
Based on these estimates, the directors have determined that the Group requires the market price of zinc to be above $2,475
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 ($9,265,000), and “Land Rehabilitation” with an estimated cost of RMB 54,566,100
($7,704,000). These amounts have been discounted over the deemed Life of Mine at a discount rate of 2.88%, being the PRC
36 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. Money Market deposits are measured at fair value with movements in fair value recognised in the income statement.
The fair value of Money Market funds are based on their quoted market price and valued using level 1 methodology.
dividends
Dividend distributions payable to equity shareholders are recognised and included in “other short term financial liabilities”
when the dividends are declared and authorised by the Board meeting prior to the reporting date, but not distributed prior to
the end of the reporting period.
84
Griffin MininG LiMited notes to the FinanCial statements
taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on
the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided
on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is
a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in
subsidiaries, associates and joint ventures is not provided if reversal of these temporary differences can be controlled by the
Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried
forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of the tax expense in the income statement, except
where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) in which case
the related deferred tax is also charged or credited directly to other comprehensive income or equity.
segment reporting
In identifying its operating segments in note 2, as determined by the Board (the Chief Operating Decision Maker), 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 years 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
Leased right of use assets are included within property, plant and equipment and on the inception of the lease at the amount of
the corresponding lease liability, adjusted for any lease payments prior to the lease commencement date, plus any direct costs
incurred and estimated dismantling, disposal or restoration costs, less any lease incentives received. The right to use assets are
depreciated over the economic live of the asset on the same basis as other legally owned assets.
lease liabilities
Lease liabilities are recognised within non-current and current liabilities. On inception, the lease liability is recognised as the
present value of the expected future lease payments, discounted using the Group’s cost of borrowing. Lease payments include
fixed payments, variable payments dependent on index or other rate, guarantees, and purchase option payments.
85
RepoRt and accounts 2023 notes to the FinanCial statements
2. segmental reporting
The Group has one business segment, the Caijiaying Zinc Gold mine in the People’s Republic of China. All revenues and costs
of sales in 2023 and 2022 were derived from the Caijiaying zinc gold mine.
REVENUE
China
Zinc concentrate sales
Lead and precious metals concentrate sales
Royalties and resource taxes
2023
$000
146,023
112,008
42,428
(8,413)
146,023
2022
$000
94,397
76,456
23,553
(5,612)
94,397
Whilst Griffin sells zinc concentrate and lead and precious metal concentrate by way of open auction in the PRC, 49.96%
($55,957,000) (2022: 67.4% $51,578,000) of zinc concentrate revenues were to a single customer with the remainder to another
five customers (2022: one) and 48% ($20,438,000) (2022: 60.8% $14,330,000) of lead and precious metal concentrate revenues
were to a single customer and the remainder to another two customers (2022: one).
COST OF SALES: CHINA
Mining costs
Haulage costs
Processing costs
Depreciation (excluding depreciation in administration expenses)
Stock movements
ADMINISTRATION EXPENSES
China / Hong Kong
Australia
UK / Bermuda
Fair value of shares issued under share incentive plan (note 4)
2023
$000
25,579
18,098
23,197
25,385
1,922
94,181
19,023
77
5,886
24,986
3,019 -
28,005
2022
$000
16,782
10,377
14,390
17,757
(3,161)
56,145
16,136
75
6,416
22,627
22,627
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
86
2023
$000
299,094
1,201
20,925
321,220
23,016
-
23,016
2022
$000
299,810
1,044
4,736
305,590
21,117
6
21,123
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
Fees for non-audit services
Staff costs
Service fees to Zhangjiakou Yuanrun Enterprise Management Consulting Services Ltd.
Average number of persons employed by the Group in the year
4. shares issued under exeCutive inCentive plan
Fair value of shares issued under share incentive plan (notes 18 & 19)
5. direCtors’ and key personnel remuneration
2023
$000
235
189
23
14,091
4,274
2023
No.
497
2023
$000
3,019 -
2022
$000
203
112
22
12,825
2,788
2022
No.
465
2022
$000
The following fees and remuneration were receivable by the Directors holding office and key personnel engaged during the
year:
Fees Salary
Pension Total
2023
contributions
Fees
Salary
Pension
Contributions
$000
$000
$000
$000
$000
$000
$000
Mladen Ninkov*
Roger Goodwin**
Dal Brynelsen
(resigned 5 May 2022)
Dean Moore
Linda Naylor
Adam Usdan
Clive Whiley
209
209
-
470
-
-
-
-
-
82
82
82
378
Key personnel
60
2,301
1,042
470
-
37
-
-
-
-
-
209
716
-
82
82
82
378
37
18
1,549
2,379
219
219
66
53
53
83
295
988
70
Total
1,102
2,771
55
3,928
1,058
-
556
-
-
-
-
-
556
1,841
2,397
-
37
-
-
-
-
-
37
-
37
Total
2022
$000
219
812
66
53
53
83
295
1,581
1,911
3,492
Key personnel comprise individuals in senior management positions.
*Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received
fees under a consultancy agreement of $2,994,000 (2022: $3,367,000), 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.
** Salary includes bonus of $37,000 (2022: $108,000)
No share options were granted to the directors in 2023 or 2022.
87
RepoRt and accounts 2023
notes to the FinanCial statements
6. losses on disposal oF plant and equipment
Losses on disposal of plant and equipment
7. FinanCe inCome
Interest on bank deposits
8. FinanCe Costs
Interest payable on short term bank loans
Interest on rehabilitation provisions
Lease interest
9. other inCome
Scrap and sundry other sales
10. inCome tax expense
Profit for the year before tax
Expected tax expense at a standard rate of PRC income tax of 25% (2022: 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
Prior period tax credit
Current taxation expense
Deferred taxation (credit)
Origination and reversal of temporary timing differences
Total tax expense
2023
$000
784
2023
$000
1,394
2023
$000
24 -
110
43
177
2023
$000
352
2023
$000
24,486
6,121
1,985
2,851
(25)
129
897
(14) -
11,944
(2,694)
(2,694)
9,250
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
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 2023 (2022: 25%) 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 $127.0m (2022: $128.5m) upon which PRC withholding tax, currently 5%, may be
deducted on distribution.
88
Griffin MininG LiMited
notes to the FinanCial statements
11. 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:
2023
Earnings Weighted Per share
amount
(cents)
Average
no of shares
$000
Earnings
$000
2022
Weighted
Average
no of shares
Per share
amount
(cents)
15,236 189,771,884
8.03
7,704
174,892,894
4.41
Basic earnings per share
Basic earnings attributable
to ordinary shareholders
Dilutive effect of securities
Options
-
1,234,740
(0.05)
-
12,384,576
Diluted earnings per share
15,236 191,006,624
7.98
7,704
187,277,470
12. property, plant and equipment
Mineral
Mill and
interests mobile mine
equipment
Offices,
furniture &
equipment
(0.30)
4.11
Total
At 1 January 2022
Foreign exchange adjustments
Transfer re rehabilitation deposit
Change in estimate of mine closure costs
Additions during the year
Disposals
Depreciation charge for the year
At 31 December 2022
Foreign exchange adjustments
Change in estimate of mine closure costs
Additions during the year
Disposals
Depreciation charge for the year
At 31 December 2023
At 1 January 2022
Cost
Accumulated depreciation
Net carrying amount
At 31 December 2022
Cost
Accumulated depreciation
Net carrying amount
At 31 December 2023
Cost
Accumulated depreciation
Net carrying amount
$000
$000
$000
$000
220,832
(12,832)
(1,012)
130
7,348
-
(13,328)
201,138
(2,269)
1,226
16,792
-
(21,505)
195,382
285,471
(64,639)
220,832
275,250
(74,112)
201,138
290,077
(94,695)
195,382
53,487
(4,836)
-
-
13,749
(226)
(6,104)
56,070
(929)
-
6,056
(521)
(6,380)
54,296
97,910
(44,423)
53,487
101,763
(45,693)
56,070
103,479
(49,183)
54,296
977
275,296
8
-
-
6
-
(17,660)
(1,012)
130
21,103
(226)
(158)
(19,590)
833
258,041
-
-
-
-
(3,198)
1,226
22,848
(521)
(141)
(28,026)
692
250,370
1,544
384,925
(567)
(109,629)
977
275,296
1,106
378,119
(273)
(120,078)
833
258,041
1,558
395,114
(866)
(144,744)
692
250,370
89
RepoRt and accounts 2023
notes to the FinanCial statements
12. 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 $3,416,000 (2022: $14,007,000) 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.
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 Cash Generation Unit. 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 2023 (2022: nil). However, as best practice and in response to an updated Life of Mine Plan, management have
updated the impairment model for latest forecast metal prices, smelter treatment charges , and revisions to mine development
costs. In determining any indications of impairment in the carrying value of the Caijiaying Mine the directors have reassessed
the net carrying value of property plant and equipment at 31 December 2023 by reference to the estimated mineral resources
at Caijiaying that may be extracted by 2050 (2022: 2050). 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 by 31 December 2024. Accordingly, a Life of Mine Plan has been prepared by the Company that indicates the
continued extraction of ore until at least 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 $2,654 (2022: $3,097) per tonne, gold of $2,000 (2022: $1,800) per troy ounce and silver
of $23.4 (2022: $22.7) per troy ounce;
• Zinc treatment charges of 25% (2022: 30%) of market prices;
• Extraction of measured and indicated resources of 41.2 million tonnes (2022: 40.4 million tonnes) to 2050 (2022: 2050)
with ore mined and processed of circa 1.5 million tonnes (2022: 1.5 million tonnes) of ore per annum;
• Operating costs, recoveries and payables based upon past performance and that budgeted for 2024 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% (2022: 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 7 Rmb to $1 (2022: 7 Rmb to $1)
Having considered the impact of climate change, the directors consider that there will not be any significant adverse impact on
future operations from climate change.
Whilst the directors consider the assumptions reasonable, sensitivities have been considered to assess the impact of changes in
key assumptions including, forecast metal prices, foreign exchange and discount rates, and have concluded that there were no
reasonable possible changes to the key assumptions that could result in an impairment.
90
Griffin MininG LiMited notes to the FinanCial statements
13. intangible assets - exploration interests
China – mineral exploration interests
At 1 January 2022
Additions during the year
At 31 December 2022
Additions during the year
At 31 December 2023
$000
387
20
407
168
575
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.
14. other non Current assets:
China – Rehabilitation Deposits
At 1 January 2023
Foreign exchange adjustments
Transfer mineral interests
Additions in the year
At 31 December 2023
15. inventories
Underground ore stocks
Surface ore stocks
Concentrate stocks
Spare parts and consumables
2023
$000
1,494 -
60
-
-
1,554
2023
$000
1,072
350
552
3,854
5,828
2022
$000
1,012
482
1,494
2022
$000
1,076
524
2,345
4,132
8,077
Inventories are in the main 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 2023 (2022: nil) requiring write
off to the Income Statement.
16. reCeivables and other Current assets
Other receivables
Prepayments
2023
$000
490
2,396
2,886
2022
$000
374
3,059
3,433
Any expected credit losses on the recoverability of receivables are not expected to be material.
Prepayments include $238,000 (2022: $349,000) in respect of supplies and services for non-current assets.
91
RepoRt and accounts 2023
notes to the FinanCial statements
17. Cash and Cash equivalents
Interest bearing money market deposits
Interest bearing bank term deposit, up to 6 months
Bank deposit on demand
18. share Capital
AUTHORISED:
Ordinary shares of $0.01 each
CALLED UP ALLOTTED AND FULLY PAID:
Ordinary shares of $0.01 each
At 1 January
Issue of shares on cancellation of share options
Shares issued under Share Incentive Plan (note 4)
2023
$000
35,761
2,276
21,970
60,007
2022
$000
16,500
979
16,659
34,138
2023
2022
Number
$000
Number
$000
1,000,000,000
10,000
1,000,000,000
10,000
174,892,894
1,749
172,892,894
1,749
10,130,526
7,805,000
101
78
-
-
-
-
At 31 December
192,828,420
1,928
174,892,894
1,749
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. There were no associated costs with this issue.
On 4 April 2023 7,805,000 shares were issued under the terms of Share Incentive Plan. See note 4. 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 returned pro rata upon leaving the employment of the Company or its
subsidiaries before 31 December 2024. There were no associated costs with this issue.
On 31 December 2023 share purchase options over 1,500,000 new ordinary shares exercisable at 30 pence per share and
500,000 new ordinary shares exercisable at 40 pence per share were exercised with the new ordinary shares on exercise issued
on 8 January 2024. See note 20. There were no associated costs with this issue.
19. share based payments
At 1 January 2023
Transfer on surrender of options
Provided in period (note 4)
2023
$000
168
-
2,941 -
3,109
2022
$000
2,072
(1,904)
168
In March 2023 the Company implemented a Share Incentive Plan (the “Plan”), to retain vital key Company personnel. On 4
April 2023 7,805,000 shares were issued under the terms of the Plan. 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 returned pro rata upon leaving the employment of the Company or its subsidiaries before 31 December 2024.
The fair value of the shares issued are charged to profit and loss over the period from issue to end of claw back period.
92
Griffin MininG LiMited
notes to the FinanCial statements
20. share options
At 1 January
2023
Number
Exercised
Lapsed
Number
Number
At 31 December
2023
Number
Options exercisable at 30 pence per share
to 31 December 2023
1,662,500
(1,500,000)
(162,500)
Options exercisable at 40 pence per share
918,333
(500,000)
(418,333)
to 31 December 2023
2,580,833
(2,000,000)
(580,833)
-
-
-
Options exercisable at 30 pence per share over 1,500,000 new ordinary shares were exercised and options exercisable at 40
pence per share over 500,000 new ordinary shares were exercised on 31 December 2023. No share purchase options were
exercised in 2022. All other remaining options lapsed at midnight 31 December 2023.
The following table shows the number and weighted average exercise price of all the unexercised share options and warrants
at the year end:
2023
2022
Number Weighted average
exercise price
Pence
Number Weighted average
exercise price
Pence
Outstanding at 1 January
2,580,833
Surrendered / exercised during the year
(2,580,833)
Outstanding at 31 December
-
33.7
(33.7)
-
20,100,833
(17,520,000)
2,580,833
32.2
32.05
33.7
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 2023
Options expiring
31 December 2023
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 (2022: $nil) during the year ended 31 December 2023 relating to equity settled
share option scheme transactions.
93
RepoRt and accounts 2023
notes to the FinanCial statements
21. shares held in treasury
At 1 January
Bought back in during the year
At 31 December
Number
939,799
2023
$000
1,644
332,125
373
2022
Number
939,799
-
$000
1,644
-
1,271,924
2,017
939,799
1,644
In 2023 332,125 shares in the Company were purchased at an average price of 91p per ordinary share (2022: none).
On 15 March 2024 10,297,943 ordinary shares in Griffin Mining Limited (“the Company”) purchased under share buyback
programmes and held in treasury were cancelled. Following the cancellation of these shares, there are 184,530,477 ordinary
shares on issue with no outstanding options or warrants.
22. dividends
No dividends were paid in 2023 (2022: nil).
23. other payables
PRC licence fees
24. long-term provisions
PROVISIONS FOR MINE CLOSURE COSTS
At 1 January
Change in estimate (note 12)
Interest charges
Foreign exchange adjustments
At 31 December
2023
$000
3,106
2023
$000
2,649
1,226
110
(56)
3,929
2022
$000
6,317
2022
$000
2,667
130
86
(234)
2,649
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 ($9,265,000), and “Land Rehabilitation” with an estimated cost of RMB 54,566,100
($7,704,000). These amounts have been discounted over the deemed Life of Mine at a discount rate of 2.88% (2022: 3.25%),
being the PRC 36 year state bond rate.
25. deFerred taxation
At 1 January
Foreign exchange adjustments
(Credit) for the year
At 31 December
2023
$000
2,717
(23)
(2,694)
-
2022
$000
3,240
(263)
(260)
2,717
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.
94
Griffin MininG LiMited
notes to the FinanCial statements
26. lease liabilities
At 1 January
Interest charges
Repayments in the year
At 31 December
Amounts falling due in more than one year
Amounts falling due within one year
2023
$000
852
42
(155)
739
570
169
739
2022
$000
971
48
(167)
852
683
169
852
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. 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 $895,000 (2022: $755,000) has been provided.
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
27. trade and other payables
Trade creditors
Other creditors
Zhangjiakou Yuanrun Enterprise Management Consulting Service Co., Limited (note 34)
Accrual for shares to be issued upon surrender of options
Accruals
2023
$000
159
159
159
159
159
-
795
2023
$000
20,917
6,457
4,697
-
6,237
38,308
2022
$000
151
151
151
151
151
151
906
2022
$000
17,010
8,943
3,237
9,317
6,403
44,910
At 31 December 2022 $9,317,000 was 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.
95
RepoRt and accounts 2023
notes to the FinanCial statements
28. 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 2023 of $269,752,000 ($245,465,000 at 31 December 2022) divided by the number of ordinary shares
in issue at 31 December 2023 of 192,828,420 (174,892,894 at 31 December 2022).
29. 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.
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 People’s Republic of China.
Sterling bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2023
$000
331
Australian dollar bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2023
$000
1,182
Renminbi bank deposits translated into United States Dollars at the closing rate are as follows:
Short term bank deposits
2023
$000
20,790
2022
$000
318
2022
$000
1,037
2022
$000
13,993
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% (2022: 10%) change in the Renminbi exchange
rate for the year ended 31 December 2023. These changes are considered to be reasonable based on observation of current
market conditions for the year ended 31 December 2023. 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% (2022: 10%) this would have had the following impact:
Net result for the year and on equity
96
2023
$000
2,310
2022
$000
1,555
Griffin MininG LiMited
notes to the FinanCial statements
29. risk management (continued)
Foreign Currency Risk (continued)
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
2023
$000
(1,890)
2022
$000
(1,272)
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the
analysis above is considered to be indicative of the Group’s exposure to currency risk.
With relatively small amounts held in Sterling, Australian dollars, and Hong Kong dollars the effect on the net results and
equity of changes in Sterling, Australian dollar and Hong Kong 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:
2023
Rmb
$000
AusD
$000
GBP
$000
2022
Rmb
$000
AusD
$000
GBP
$000
449
21,157
1,187
609
17,128
1,043
(1,030)
(36,295)
(24)
(1,254)
(38,193)
(24)
(581)
(15,138)
1,163
(645)
(21,065)
1,019
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% (2022: + 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
2023
2022
Plus 100% Minus 100%
$000
$000
Plus 100% Minus 100%
$000
$000
1,394
(1,394)
369
(369)
Fixed and non interest bearing financial assets and liabilities are as follows:
2023
interest rate
Fixed Non interest
bearing
Total
2022
Fixed Non interest
bearing
interest rate
Total
$000
$000
$000
$000
$000
$000
Financial assets
Cash at bank
Rehabilitation deposits
Other receivables
Total Financial Assets
35,756
-
-
35,756
24,251
1,554
490
26,295
60,007
1,554
490
62,051
17,479
-
-
17,479
16,659
1,494
374
18,527
34,138
1,494
374
36,006
Lease liabilities
Trade and other payables
(739)
-
-
(41,414)
(739)
(41,414)
(852)
-
-
(41,910)
(852)
(41,910)
Total Financial Liabilities
Net Financial assets / (liabilities)
(739)
35,017
(41,414)
(15,119)
(42,153)
19,898
(852)
16,627
(41,910)
(23,383)
(42,762)
(6,756)
97
RepoRt and accounts 2023
notes to the FinanCial statements
29. risk management (continued)
Commodity risk
The Group is exposed to the risk of changes in commodity prices and in particular that for zinc, gold and to a lesser extent
silver and lead. The Group currently sells its metal concentrate production by way of open auctions in China. The Group did
not hedge its metal production in 2023 or in 2022.
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%
(2022: zinc plus 30% and minus 30%, gold plus 10% and minus 10% and silver plus 20% and minus 20%), with effect from the
beginning of the year. These changes are considered reasonable based upon observation of current market conditions within
which the Group operates. This sensitivity analysis is based upon the Group’s sales in each year:
Net result for the year – zinc
Net result for year – gold
Net result for year – silver
Credit risk
2023
Plus
$000
Minus
$000
2022
Plus
$000
Minus
$000
23,685
(23,685)
16,169
(16,169)
2,452
(2,452)
1,341
(1,341)
940
(940)
584
(584)
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. Excess funds are placed on money market with counter party premier banks (note 17).
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 2023 the Group held cash and cash equivalents (bank deposits) with high
credit financial institutions of $60,007,000 (2022: $34,138,000) 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. Hebei Hua Ao retains rolling bank loan facilities
of Rmb150m ($21.4m) renewable on 14 May 2025 and Rmb100m ($14.3m) renewable on 23 May 2024 that have not been
drawn down.
30. 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.
98
Griffin MininG LiMited
notes to the FinanCial statements
30. Capital management and proCedures (continued)
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 $269,752,000 at
31 December 2023.
31. 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
Other receivables and rehabilitation deposits
FINANCIAL LIABILITIES
Lease liabilities at amortised cost
Trade and other payables
Contractual maturities of financial liabilities:
2023
$000
60,007
2,044
62,051
739
41,414
42,153
2022
$000
34,138
1,868
36,006
852
41,910
42,762
At 31 December 2022
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
35,592
151
Total non-derivatives
35,743
3,159
151
3,310
3,159
151
3,310
-
453
453
41,910
906
42,816
41,910
852
42,762
At 31 December 2023
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
38,308
159
38,467
-
3,106
159
3,265
-
-
159
159
-
-
318
318
-
41,414
795
42,209
-
41,414
739
42,153
-
99
RepoRt and accounts 2023
notes to the FinanCial statements
32. subsidiary Companies
At 31 December 2023, 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 Limited, China Zinc Limited, Griffin Mining (UK Services) Limited and Panda Resources Limited are
directly owned by the Company. China Zinc Limited has a 100% interest in China Zinc (Resources) Limited and a controlling
interest in Hebei Hua’ Ao Mining Industry Company Limited, see below, and Panda Resources Limited has a 90% controlling
interest in Hebei Sino Anglo Mining Development Company Limited.
** The joint venture contract establishing the Hebei Hua’ Ao Mining Industry Company Limited provides that the foreign
party (China Zinc Limited) 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 $3,903,000 (2022: $2,399,000) are included in net
operating costs rather than attributable to non-controlling interests. Likewise, the amounts due at 31 December 2023 of
$4,697,000 (2022: $3,237,000) are included in other payables rather than due to non-controlling interests within equity within
the Consolidated Statement of Financial Position.
33. Commitments
At 31 December 2023 the Group had capital commitments of $5,415,000 (31 December 2022: $824,000).
34. related parties
Keynes Capital
Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received
fees under a consultancy agreement of $2,994,000 (2022: $3,367,000), 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
Zhangjiakou Yuanrun Enterprise Management Consulting Services Ltd
During the year $4,274,000 was charged (2022: $2,788,000) 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 2023 $4,697,000 (2022: $3,237,000) was due to this company.
100
Griffin MininG LiMited
notes to the FinanCial statements
35. post balanCe sheet events
On 31 December 2023, options over 1,500,000 new ordinary shares in the Company exercisable at 30 pence per share and over
500,000 new ordinary shares in the Company exercisable at 40 pence per share were exercised. These shares were issued and
admitted to trading on AIM on 8 January 2024.
On 5 January 2024 the Company entered into trades committing to purchase, through its joint broker Joh. Berenberg, Gossler
& Co. KG, 8,886,128 of the Company’s own ordinary shares (“Ordinary Shares”), representing 4.6% of the Company’s issued
share capital (excluding shares already held in treasury), at a price of 88 pence per Ordinary Share, for a total consideration of
£7,819,792 ($1,117,000), excluding brokers fees.
On 15 March 2024 10,297,943 ordinary shares in the Company purchased under share buyback programmes and held in
treasury were cancelled. Following the cancellation of these shares, there are 184,530,477 ordinary shares on issue with no
outstanding options or warrants.
At 31 December 2023 there were no adjusting post balance sheet events (2022: none).
101
RepoRt and accounts 2023 102
Griffin MininG LiMited Caijiaying Mine Operational Facilities - Winter 2024
103
RepoRt and accounts 2023 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, EC2R 8HP, UK
Independent Auditors:
PricewaterhouseCoopers LLP
1 Embankment Place, London, WC2N 6RH, UK
Solicitors:
Bird and Bird
8/F China World Office 1, Jianguomenwai Dajie,
Chao Yang District, Beijing 10004. PRC
Bird & Bird LLP
12 Fetter Lane, London. EC4A 1JP, UK
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
104
Griffin MininG LiMited