Griffin Mining's annual profits drop as gold production falls

Griffin Mining's shares retreated Thursday after the company posted a fall in annual revenue and profit.

Griffin Mining's shares retreated Thursday after the company posted a fall in annual revenue and profit.

Revenues for the year ended December 31st 2012 came to $76.9m, a 2.7% fall from the prior year's $79.1m. Pre-tax profits dropped 15.2% to $31.2m from $36.8m.

The mining group blamed lower metal prices and a decrease in gold production.

Record production in ore, zinc, silver and lead was offset by a fall in gold output by 19.1% to 8,322 ounces compared to 10,281 ounces in 2011.

While average gold prices increased 4.0% to $1,499, prices for other metals declined. Zinc fell 11% to $1,374 per tonne, silver declined 13% to $22.80 per ounce and lead dropped by 10% to $1,855 per tonne.

Cost of sales rose 9.0% to $34.7m while operating costs, including site administration of Caijiaying Mine in Beijing, increased 5.6% to $10.9m reflecting inflationary cost pressures in China.

Interest costs of $3.4m were incurred after bank loan facilities in China were drawn down in 2012 to fund the payment of dividends used in the transaction to purchase the non controlling interests in and extension of the Hebei Hua Ao joint venture.

Net cash inflow from operating activities in 2012 came to $32.2, down from $43.4m.

The company recommended that no dividend be paid as resources will be needed for further investment in the Caijiaying Mine.

"It has been a remarkable year for Griffin in spite of further decreases in metals prices, continuing global economic turmoil, virtually no real growth in the western world, the continuing destruction of true wealth worldwide and stalled real growth in China," said Chairman Mladen Ninkov.

"Yet in spite of all this economic negativity, Griffin was still able to achieve a memorable year."

He said the company will investigate new mining ventures with economic returns this year.

RD

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