Running at half capacity

Griffin Mining's Caijiaying mine in northern China is running at half its design rate, and the timing of a return to full output rests on regulatory approvals rather than geology. In its interim statement for the six months to 30 June 2026, published on 10 September, the company said the mine remained at 750,000 tonnes a year, half its 1.5 million tonne capacity, and expected that reduced rate to continue through the rest of 2026 and into early 2027.

About Griffin

Griffin (LSE:GFM), quoted on AIM since 1997, owns and operates Caijiaying, an underground zinc, lead, gold and silver mine in Hebei Province. Its Mining licence was renewed in January 2026 to 2054. The company reports in US dollars.

The two approvals that matter

The first is a safety permit from the provincial emergency response bureau for Zone II, a new area of the orebody where infrastructure and workings are complete and production began in April. Griffin said it expects the permit at some point in the last quarter of 2026, after which full budgeted Zone II production can begin.

The second, and the main constraint on throughput, is approval of Tailings Safety Facility 4, which has already been built. LSE:GFM said the return to 1.5 million tonnes a year depends on that consent and that it intends to raise output as soon as practicable once it is granted. Without the flexibility of the new facility, the company warned, its current paste Fill tailings practice cannot be continued through 2027, and production will remain variable until approval is received.

The company linked tighter oversight to the gas explosion at the Liushenyu coal mine in Shanxi Province on 22 May 2026, which it said caused 82 reported fatalities and led to enhanced scrutiny across China's mining sector.

What the constraint costs

Ore processed fell to 419,128 tonnes in the half from 588,852 tonnes a year earlier, and zinc in concentrate dropped to 13,606 tonnes from 17,093 tonnes. Even so, higher metal prices lifted Revenue to $77.3m from $63.7m and operating profit to $28.2m from $13.6m. The directors estimated that, had the mine operated at full throughput, operating profit for the half would have been roughly $60m to $65m, which indicates the scale of Earnings currently deferred.

Profit after tax for the half was $21.0m, against $8.8m a year earlier, and Basic Earnings Per Share rose to 11.89 cents from 4.75 cents. Chairman Mladen Ninkov said that, unshackled, it was extraordinary what the orebody and the company's people could deliver.

Balance sheet and risks

LSE:GFM ended June with $39.6m of cash and no bank borrowings, after $14.8m of Capital spending and $14.2m of share Buybacks that cancelled 3.3 million shares. That gives it resources to wait for approvals, but cash fell from $47.5m at the end of 2025.

The principal risk is timing. Permit decisions rest with Chinese authorities, and the company has given no firm date for the tailings approval. If consent slips well into 2027, the warning about paste fill suggests output could become more constrained rather than simply staying flat. Results also remain highly sensitive to zinc and precious metal prices. A new chief financial officer, Asha Santchurn, formerly an audit director at BDO, took over from long-serving finance director Roger Goodwin on 1 October, adding a transition in financial Leadership during this period.

How the half-year figures compare

Ore processed fell about 29% to 419,128 tonnes from 588,852 tonnes, and zinc in concentrate fell about 20% to 13,606 tonnes from 17,093 tonnes. Revenue nonetheless rose about 21% to $77.3m from $63.7m, and operating profit more than doubled to $28.2m from $13.6m. Revenue per tonne of ore processed therefore rose sharply, which indicates that metal prices, and perhaps a better grade or mix, more than offset the lower volume.

The directors' estimate that full throughput would have meant operating profit of roughly $60m to $65m is about double the $28.2m reported, so the restriction is costing the company about half of its potential earnings for the period, on that estimate.

Why tailings facilities matter

Tailings are the finely ground waste left after minerals are extracted. Storing them safely is among the most closely supervised parts of a mine's operation. Paste fill is a method in which tailings are mixed with binder and returned underground to fill mined-out areas, which reduces the amount stored on the surface. Griffin warns that its current paste fill practice cannot be continued through 2027 without the new facility, so Tailings Safety Facility 4 is needed for output to continue at all, rather than merely to expand.

The facility has already been built, which means the capital has been spent and the remaining step is regulatory.

The permit for Zone II

Zone II is a new part of the orebody with infrastructure and workings complete, where production started in April. The safety permit expected in the last quarter of 2026 would allow full budgeted production from that area. The company has set that expectation as a period rather than a date, so the timing is not precise.

Cash and capital returns

Cash fell to $39.6m from $47.5m at the end of 2025, a decrease of $7.9m, after capital spending of $14.8m and buybacks of $14.2m. The buybacks cancelled 3.3 million shares, which implies an average price of about $4.30 a share. With no bank borrowings, the company can fund its programme from cash, although a long delay to approvals would reduce the cushion.

Earnings per share of 11.89 cents compared with 4.75 cents a year earlier show the combined effect of higher profit and a lower share count.

The regulatory background

The gas explosion at the Liushenyu coal mine on 22 May 2026, with 82 reported fatalities, prompted enhanced scrutiny across the sector. Although Griffin's mine is a metals operation, not a coal one, tighter oversight applies broadly to mine safety, which is why approvals for tailings and new zones are taking longer. The renewal of the mining licence in January 2026 to 2054 provides a long tenure that is separate from these operating consents.

What to watch

The next markers are announcements on the Zone II safety permit, expected by the end of 2026, and on Tailings Safety Facility 4, plus full-year results for 2026, which the company has in recent years published in the spring.