2020 Results preliminary Announcement

In 2020, the Company and its subsidiaries (together the “Group”) recorded;

• Revenues of $75,403,000 (2019: $82,267,000);
• Operating profit of $15,148,000 (2019: $14,225,000);
• Profit before tax of $14,515,000 (2019: $11,712,000);
• Profit after tax of $8,910,000 (2019: $6,084,000); and
• Basic earnings per share of 5.16 cents per share (2019: 3.52 cents).

Despite interruptions to operations in the first quarter of 2020 with restrictions imposed by the Chinese authorities to contain the Covid-19 pandemic, the Group recorded a 6.5% increase in operating profits on that recorded in 2019, primarily as a result of higher zinc metal prices received and reduced costs.

Turnover of $75,403,000 was down $6,864,000 (8.3%) on that achieved in 2019 of $82,267,000. This reflects zinc in concentrate sales down $2,532,000 (4.6%) with 5,535 tonnes (14.6%) less zinc in concentrate sold at average prices of $174 per tonne (11.8%) higher than in 2019, as the Group benefited from rising market prices and falling smelter treatment charges. Lead and precious metal in concentrate sales were down $3,851,000 (12.9%) on 2019 with 6,494 ozs (36.7%) less gold in concentrate sold at average prices of $441 per oz (33.4%) higher than 2019 and 41,337 ozs (12.4%) less silver in concentrate sold at average prices of $3.9 per oz (28.3%) higher than 2019.

In 2020, metal in concentrate sales were:

• Zinc 32,276 tonnes (2019: 37,811 tonnes);
• Gold 11,218 ozs (2019: 17,712 ozs);
• Silver 291,756 ozs (2019: 333,093 ozs); and
• Lead 1,425 tonnes (2019: 1,221 tonnes).

Average prices achieved in 2020 were:

• Zinc metal per tonne of $1,645 (2019: $1,471);
• Gold metal per oz of $1,759 (2019: $1,318);
• Silver metal per oz of $17.70 (2019: $13.80); and
• Lead metal per tonne of $1,339 (2019: $1,575).

Cost of sales of $42,737,000 in 2020 were down 12.1% on that incurred in 2019 of $48,609,000. This reduction in the main reflects less ore mined, hauled and processed with operations impacted by restrictions to contain the Covid-19 pandemic in the first quarter. Additional cost savings were achieved in mining and haulage thereby reducing unit costs per tonne of ore. Despite the reduction in tonnes of ore mined and processed, non-cash depreciation charges rose with additional capital costs.

Administration expenses fell $1,915,000 (9.9%) from $19,433,000 in 2019 to $17,518,000 in 2020. This reduction reflects efforts to contain costs across the Group during the Covid-19 pandemic, despite additional work on the application for a mining licence at Zone II and Green Mine certification.

Foreign exchange gains of $22,000 (2019: losses $93,000) were recorded in 2020, mainly on a strengthening of the Renminbi.

Interest of $108,000 (2019: $171,000) was received on bank deposits in 2020 whilst interest of $111,000 (2019: $51,000) was paid on short term bank loans. Finance interest on the lease of the dry tailings facility at Caijiaying and the London office totalling $171,000 (2019: $326,000) was incurred in 2020. Deemed interest on discounted rehabilitation provisions of $77,000 (2019: $Nil) was charged in 2020.

Losses on the disposal of $1,129,000 (2019: $305,000) were recorded with equipment being replaced to meet higher Chinese environmental standards.

Income taxes of $5,605,000 (2019: $5,628,000) have been charged in 2020. This includes a deferred taxation charge of $424,000 (2019: $380,000), and PRC withholding taxes on dividend distributions and fees of $232,000 ($50,000).

Basic earnings per share in 2020 was 5.16 cents (2019: 3.52 cents) and diluted earnings per share was 4.88 cents (2019: 3.24 cents).

Cash generated from operations of $24,398,000 (2019: $21,639,000) has been used in further developing the mine and facilities.

Attributable net assets per share at 31st December 2020 was $1.35 (2019: $1.24).

Chairman’s Statement:

I believe I can safely say, this was the year when Griffin fulfilled all of its outstanding promises to its past, current and future shareholders by delivering the confirmed regulatory and operational requirements to propel the Company forward into the foreseeable future. The list of achievements is extraordinary.

Firstly, the granting by the Chinese Ministry of Land and Natural Resources (the “MNR”) of new the Mining Licence covering both Zone II and Zone III in conjunction with the issuance of the 3^rd Stage Zone III Project Final Acceptance Permit (the “PFA”) was a momentous achievement in terms of time, complexity and operational importance. It will increase the annual ore mined from Zone III from 820,000 tonnes in 2020 to 1.1 million tonnes in 2021, but with the increased ore accessed from Zone II, this should increase to over 1.5 million tonnes per annum in 2022, possibly increasing further as these zones continue to be developed. It catapults Griffin into the ranks of one of the largest zinc producers in China, which remains the largest consuming base and ferrous metals market in the world.

Secondly, the announcement of the new Global Mineral Resource estimate reported in accordance with the JORC Code (2012) for the Caijiaying Mine of an amazing 101.5 million tonnes at 3.9% Zinc, 0.6% Lead, 27.0 g/t Silver and 0.5 g/t Gold, resulting in total contained metal of approximately 4.0 million tonnes of Zinc, 0.6 million tonnes of Lead, 88.8 million ounces of Silver and 1.59 million ounces of Gold totalling $17.7 billion of metal in situ, a 50% increase in the known mineral resource.

Thirdly, obtaining Green Mine accreditation by the MNR having passed the national level green mine assessment. Failing to obtain certification would have meant closure of the Caijiying Mine. So not only has the smooth continuation of operations at the Caijiaying Mine been ensured, but it continues also to show the Company’s commitment to the environment, the local Chinese community and to the greater People’s Republic of China. Green Mine approval comes after the Company’s past environmental best practices were recognised by the Chinese government with the Environmental Award and the Mine Development Outstanding Achievement Award at successive China Mining Conferences.

Fourthly, yet another outstanding operational result considering operations were either suspended or severely curtailed in the first quarter of 2020 due to the Covid-19 pandemic, with access being denied for the whole of 2020 to the deeper stopes in Zone III awaiting PFA approval and the wait for the Zone II new Mining Licence. Nevertheless, operating profit, profit before tax, profit after tax and earnings per share all increased. Griffin now has the extraordinary claim that it has been profitable on an operational basis, in all the turmoils of the commodities markets, for the full 15 years it has been in operation and has only made a loss, on a net profit basis, in one of those years.

Fifthly, and although I place little faith in the share price as an indicator of value, in the last 12 months the Company’s share price has increased approximately 200%; 65.1% against the FTSE Fledgling Index, 64% against the FTSE All AIM Index and 60% against the FTSE Small Mining Cap Index. A remarkable performance.

As the Company has grown and generated cash, inevitably various opinions have been voiced in relation to the share price, share buybacks, dividends and even the realisation of the value of the Company. It is enough to say that your board continues to evaluate all these options on an ongoing and meticulous basis and remains committed to ensuring that the views of all the shareholders are considered and, where possible, acted upon, a course of action that Solomon himself, with all his wisdom, would find difficult.

The Company continues to evaluate opportunities not only through acquisition or organic expansion but also through continuing exploration at the Caijiaying Mine and the surrounding region and through exploration outside of Hebei Province wherever host rocks mimic the Caijiaying Mine area and provide the potential for significant exploration success.

Penultimately, I would like to thank our Chinese and ex pat employees, contractors, consultants, subsidiary directors, partners, spouses and children. Life has taught me that people make things happen and, in the extraordinary Covid-19 year of 2020, these very people went above and beyond the call of duty to travel and work in extremely difficult circumstances, often leaving homes and loved ones, to put the Company’s interests first. We couldn’t be more grateful.

Lastly, I would like to thank on behalf of the shareholders, those few to whom we owe so much and of whom Michael Jordan said in The Last Dance “Have some respect for the people who laid the foundations to make this a profitable organization.” I call them the founders of the Company. Those who believed when no-one believed. Those who flew standby (when that existed) and sat at the airport for a week hoping to catch a flight home. Those few who went to Caijiaying when it was a 12-hour drive from Beijing on a single lane gravel road overrun with over-laden coal trucks and stayed at what can only loosely be called accommodation. Those few who took no salaries or compensation and stayed when the Company had almost run out of funds. Those few who worked out of a terrible, serviced office the size of a cupboard. Those few include Roger Goodwin, Dal Brynelsen, the deceased Bill Mulligan and the recently departed Rupert Crowe.

It would be absolutely wrong of me to not mention Rupert, even though I have said much before. His wisdom, expertise and counsel are missed every day by all of us at Griffin. Without him, the Caijiaying Mine would have remained a valley, topped by Mongolian sands, next to a little village in northern China. An extraordinary, brilliant geologist, the Father of Caijiaying and, far more importantly, a gracious, gentle, considered, dedicated, intelligent human being it has been my absolute privilege to know and to have spent a large portion of my working life.

With the past behind us, I look forward to the next year of this incredible journey.