Home » VectorVest » Buy Griffin Mining #GFM says VectorVest. Recent price action, technical picture and fundamental outlook point to attractive upside opportunity.

Buy Griffin Mining #GFM says VectorVest. Recent price action, technical picture and fundamental outlook point to attractive upside opportunity.

Griffin Mining Limited (GFM.L) is a mining and investment company, incorporated in Bermuda and listed on the London AIM market. The major asset of the Company is an 88.8% interest in Hebei Hua Ao Mining Industry Company Limited, the holder of 6.0 square kilometres of mining and exploration licences and the mine and processing facilities at Caijiaying in the People’s Republic of China. The Company also holds 90% of Hebei Sino Anglo Mining Industry Company Limited, which controls 15.7 square kilometres of exploration licences immediately surrounding the Caijiaying Mine. The Company continues to aggressively explore, expand and develop the Caijiaying mine, whilst also investigating further potential acquisitions of mining projects that are capable of being brought into production and to meet historically preset, economic returns to shareholders.

Examine this trading opportunity and a host of other similar stocks. A single payment of £5.95 gives access to the VectorVest Risk Free 30-day trial. More here

On August 7th 2018, GFM published half-year results for the period to June 30th 2018. The Company reported PBT of $21.3m on revenues of $54.1m and basic EPS of 8.95 cents (2017: 8.85 cents). The period in question saw a 21% fall in the zinc price, although this only marginally impacted profitability, while higher grade gold areas resulted in record gold in concentrate production. Operations at Caijiaying were maintained with minimal disruption throughout the first half of 2018. During the period, 448,530 tonnes of ore were processed to produce 16,873 tonnes of zinc, 459 tonnes of lead, 132,689 ounces of silver and 9,492 ounces of gold. Cost of sales of $23,336,000 in the first six months of 2018 was up on that incurred in 2017 of $20,820,000. This in the main reflects additional costs incurred extracting ore from greater depth and backfilling waste material and tailings to minimise surface storage of tailings. With cash flows from operations now directed towards the development of the Zone II area at Caijiaying and in line with previous years’ practice of determining annual dividends at the time of the Company’s full year results, no interim dividend has been declared by the Board of Griffin. Chairman Mladen Ninkov said it was a“wonderful result in light of the 21% fall in the zinc price since the beginning of the year.”He added that H2 “will remain challenging if commodity prices remain subdued.  However, the recent signing of the Contract of Transfer and the progress towards the issue of the new Mining Licence over Zone II, sets the stage for an exciting 2019.”

On numerous occasions in the past, VectorVest has flagged up the GFM investment opportunity to members. A strong run earlier in the year despite the weak zinc price was followed by a retracement in the stock through the summer months, followed by the beginnings of a recovery in September. Now trading at 111p, the stock logs an excellent RV (Relative Value) rating of 1.44 (scale of 0.00-2.00), but uncertainties over China and the trading environment weighs across the RS (Relative Safety) metric, where GFM scores a fair rating of 0.92 (scale of 0.00 to 2.00). Despite this, GFM logs a very good Relative Timing (RT) (stock price trend) rating of 1.30, (again on a scale of 0.00 to 2.00) and an excellent forecasted GRT (Earnings Growth Rate) of 29.00%. VectorVest believes the stock is well worth considering at current levels against a current valuation of 159p per share.

A weekly chart of GFM.L is shown above over a period of 3 years. After an outstanding run from around 60p to 160p (which most VectorVest subscribers banked) the share has pulled back to the long-term support as defined by the inclined simple trend line of the chart. The pullback occurred in a three-wave pattern which technical analysts consider to be a correction rather than a change in the longer-term trend. From the low on 24thSeptember at support the share has been strongly accumulated and is now on a BUY recommendation on VectorVest. A break and close above 118p would confirm a rising bottom which is a very positive sign.

Summary: A long standing favourite of VectorVest (and myself), GFM provides a reasonably predictable platform, which, if the timing is correct can yield decent returns. We believe such an opportunity exists now given the recent price action, technical picture and fundamental outlook as stated by the Chairman. Investors uncomfortable with mining operations in China may want to look elsewhere, but our view remains that the stock currently offers an attractive amount of upside even with softer commodity prices and a strong US$.

Dr David Paul

November 14th 2018

Readers can examine trading opportunities on this and a host of other similar stocks for a single payment of £5.95. This gives access to the VectorVest Risk Free 30-day trial, where members enjoy unlimited access to VectorVest UK & U.S., plus VectorVest University for on-demand strategies and training. Link here to view.

VectorVest Unisearch

On VectorVest a simple search using the Unisearch tool will quickly find shares that are undervalued with good fundamentals that have just issued a Buy recommendation. This will give the active trader a short list of many high probability trading opportunities each week. Traders now have the opportunity to spend five weeks discovering VectorVest’s unique simplicity, automation and independent guidance. Just £5.95 buys a 30-day trial to enable deep exploration, or how the system can assist in smarter trading in as little as 10 minutes a day. Powerful tools. Proven strategies. Unique Perspectives.

Link here for more info and to set up a trial.

European Financial Publishing Limited T/A VectorVest UK (VectorVest) is authorised and regulated by the Financial Conduct Authority under register number 543038. You should remember that the value of investments and the income derived therefrom may fall as well as rise and you may not get back the amount that you invest. Past performance is not a reliable guide to the future. This material is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. If investors are in any doubt of the suitability of an investment given their individual circumstances, they are recommended to contact an investment manager or independent financial adviser who may be able to provide tailored advice. Opinions expressed whether in general or both on the performance of individual securities and in a wider economic context represent the views of VectorVest at the time of preparation. They are subject to change and should not be interpreted as investment advice. VectorVest and connected companies, clients, directors, employees and other associates, may have a position in any security, or related financial instrument, issued by a company or organisation mentioned on this site. European Financial Publishing Limited is a company incorporated in Scotland under Company Number SC357322 with its registered address at Exchange Tower, 19 Canning Street, Edinburgh EH3 8EH. Email: support@VectorVest.com

Leave a comment

I would like to receive Brand Communications updates and news...
Free Stock Updates & News
I agree to have my personal information transfered to MailChimp ( more information )
Join over 3.000 visitors who are receiving our newsletter and learn how to optimize your blog for search engines, find free traffic, and monetize your website.
We hate spam. Your email address will not be sold or shared with anyone else.