Griffin Mining pretax profit falls 74%
miningweekly.com
By: Reuters
30th April 2009
China-focused Griffin Mining Ltd posted a 74 percent decline in full-year profits due to a fall in the price of zinc, and said it would not pay a dividend to preserve cash.
The company said full-operations at Caijiaying zinc-gold mine, where production had been suspended temporarily since the end of December 2008, would resume by the beginning of June.
For the year ended Dec. 31, the company's pretax profit was $7-million compared with $26.8 million a year ago.
Revenue fell 15.6 percent to $32.1 million.
Griffin noted that zinc price fell 46 percent in 2007 and a further 50 percent in 2008.
The company, which recently withdrew its proposed takeover of Canadian base metals firm Ivernia Inc, said it would like to pursue acquisitions in the current market.
"In spite of the lack of success to date, Griffin continues to assess acquisition opportunities in order to leverage its cash into undervalued assets," Ambrian's analyst Julian Emery said in a note to clients.
"The key driver, however, is the reactivation of Caijiaying, which remains a potentially low-cost operation with an expansion programme," Emery, who has a "hold" rating on the stock, said.
The company, which paid a dividend of 3 cents last year, scrapped the dividend for the current year, citing a fall in profits, current suspension of operations at Caijiaying and the need to preserve cash.
In a research note, Seymour Pierce said it had expected a modest dividend of 9 cents per share, but the company chose not to pay it for the first time since 2005.
"With production at Caijiaying suspended during the first quarter and zinc still in the doldrums, we feel there is little to drive the stock forward ahead of another potential acquisition," Seymour Pierce said in a note.
Griffin shares, which have gained 55 percent since the start of the year, were down a penny at 26.5 pence at 1100 GMT on the London Stock Exchange. |
