Griffin Mining anxious over H2 commodity prices after profits fall

Griffin Mining on Tuesday reported a drop in first half pretax profit and said the rest of the year will prove “challenging” if commodity prices fail to improve.

The China-focused foreign investment mining firm recorded a 3% year-on-year drop in pretax profit to $21.3m as a 12% increase in cost of sales to £23.3m outweighed a 3% increase in revenues for the six months ended 30 June.

Griffin’s net profit also fell to $15.3m from $15.8m for the same period in 2017.

"This is a wonderful result in light of the 21% fall in the zinc since the beginning of the year. The second half of the year will remain challenging if commodity prices remain subdued," said chairman Mladen Ninkov.

The revenue increase was achieved courtesy of record production of gold in concentrate offsetting the drop in the price of zinc but costs jumped due to ore extraction from greater depth and backfilling of waste material.

At 30 June the company had cash and cash equivalents of $27.8m, up from $15.8m the year before.

"The recent signing of the contract of transfer and the progress towards the issue of the new mining licence over Zone II, sets the stage for an exciting 2019," said Ninkov.

Griffin said that its subsidiary Hebei Hua Ao will be prioritized in final documentation approvals for the conversion of the exploration licence over Zone II of the Caijiaying Zinc-Gold Mine into a mining licence.

This follows the signing of a contract with the Hebei department of land and mineral resources, as authorised by the Beijing Ministry of Natural Resources.

Griffin Mining’s shares were down 13.73% at 122.50p at 1109 BST.