Berenberg raises target price on Griffin Mining

Analysts at Berenberg raised their target price on Griffin Mining from 130.0p to 170.0p on Wednesday following a 107% increase in its Zone II resource at the group's Caijiaying mine in China.

Griffin received permits to begin mining on Zone II, adjacent to an existing mine that exploits Zone III, at the beginning of the year and revealed in its new resource estimate 40.7m tonnes at 3.7% zinc, 0.9% lead, 28.4g per tonne of silver and 0.4g per tonne of gold that hosts 1.49m tonnes of zinc, 36.0m ounces of silver and 460,000 ounces of gold.

The German bank highlighted that the increase on the previous resource suggested 21.1m tonnes of additional material and included an across-the-board increase in grade.

"The main driver of the increase in the resource is a reinterpretation of the structural controls on mineralisation supported by additional drilling with 500 surface and underground drill holes completed," said Berenberg.

The analysts did note that the updated resource included 2.77m tonnes of oxidised material that may require some modifications to the processing circuit, although they acknowledged that this accounts for only 6.8% of the total within the new resource.

"We maintain a 'buy' recommendation and increase our price target to GBp170 from GBp130 based on a blend off 1x NAV and 8x EV/EBITDA."