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Griffin sees profits slide on lower zinc prices

China-focused zinc producer Griffin Mining saw net profit for the first half of 2019 tumble by 73% year-on-year to $4.1 million, which the company put down to lower zinc prices and higher smelting costs.
Griffin sees profits slide on lower zinc prices Griffin sees profits slide on lower zinc prices Griffin sees profits slide on lower zinc prices Griffin sees profits slide on lower zinc prices Griffin sees profits slide on lower zinc prices

Griffin Mining's operations at Caijiaying in China

Staff reporter

Production was down marginally, with the company delivering 16,692 tonnes of zinc in H1, 1% below the same period in 2018. Griffin received an average zinc price of $1,591/t, down 37% yoy.

Gold production fell by 4.1% over the same period to 9,099 ounces.

"Although all stakeholders in the company will be disappointed with the financial results for the first half of 2019, they are directly, and practically solely, attributable to the fall in the zinc price and the tremendously higher smelter treatment charges in the first six months of the year," said Chairman Mladen Ninkov.

"As is often said, mining is a fixed cost business and, as such, a reduction is sales revenues has a direct and significant effect on the margin of profit. We continue to hope for a higher zinc price and lower treatment charges for 2019 into 2020."

Although disappointing, the poor results come as little surprise: Griffin issued a trading update late June saying smelter charges for the first five months of the year were up by 65% year on year. The higher costs were driven by a number of smelter closures, triggered by Beijing's increasing focus on the environment.

Shareholders did not welcome the new numbers, with Griffin's share price down by 4.4% in early UK trading versus its closing price on Friday.