Griffin Mining : 2021 Annual Report

	Report and Accounts 2021
Contents
Chairman's Statement	4
Overview	6
Caijiaying	7
Introduction	7
Development	7
Mineral Resource Estimates	8
Geology	11
Exploration	11
Operations	13
Sustainability, Environment And Local Community	18
Financial Results	32
Strategic Review	33
Overview	33
Caijiaying	33
Acquisitions And Further Projects	33
Climate Change	33
Corporate Governance	34
Report Of The Audit Committee	36
Report Of The Remuneration Committee	38
Directors	41
Senior Executives	42
Directors' Report	43
Independent Auditors' Report	49
Consolidated Income Statement	55
Consolidated Statement Of Comprehensive Income	56
Consolidated Statement Of Financial Position	57
Consolidated Statement Of Changes In Equity	58
Consolidated Cash Flow Statement	59
Notes To The Financial Statements	60
Corporate Information	84

Griffin Mining Limited ("Griffin" or "the Company") is a mining and investment company whose principal asset

is the Caijiaying Zinc-Gold Mine.

Further information on the Company is available on the Company's web site: www.griffinmining.com.

Griffin's shares are quoted on the Alternative Investment Market (AIM)

of the London Stock Exchange (symbol GFM).

Registered in Bermuda, number: 13667.

Registered Office: Clarendon House, 2 Church Street, Hamilton HM11, Bermuda

United Kingdom office: 8 Floor, 54 Jermyn Street, London. SW1Y 6LX

1

Griffin Mining Limited

2

Report and Accounts 2021

Caijiaying Mine with rehabilitated Tailing Facilities 1 and 2 3

Griffin Mining Limited

Chairman's Statement

It gives me great pleasure to present to you, the shareholders of Griffin Mining Limited ("Griffin" or the "Company"), the Annual Report and Accounts of the Company for the 2021 calendar and financial year (the "Annual Report"). In terms of the Company's financial and operational performance, it has been a stellar year, even more extraordinary considering Zone II has yet to be fully developed or brought into production and in light of the continuing restrictions imposed by the Covid-19 pandemic in China.

In 2021, in comparison to 2020:

• Revenue was 61% higher at $121,648,000;
• Operating profit was 143% higher at $36,925,000;
• Profit before tax was 152% higher at $36,526,000;
• Profit after tax was 185% higher at $25,376,000; and
• Basic earnings per share was 182% higher at 14.53 cents per share.

Operationally, record amounts of ore were mined and processed in 2021 and metal production of our 2 largest revenue producers, zinc and gold, were substantially higher than in the previous year:

• Ore mined was up 14% at 971,492 tonnes;
• Ore hauled was up 19% at 979,783 tonnes;
• Ore processed was up 20% at 985,404 tonnes;
• Zinc metal in concentrate produced was up 28% at 41,587 tonnes; and
• Gold metal in concentrate produced was up 28% at 14,447 ounces.

This bodes very well for the future results of the Company when Zone II is commissioned and in full production. Since the grant of the new mining licence over Zone II in January 2021, the Company has been working continuously and tirelessly on obtaining approval for the design and development of Zone II. That approval is expected shortly and drive development is planned to begin on the 1 July 2022. In the interim, the first drill platform for resource drilling at Zone II was constructed in September 2021 and diamond drilling commenced in early October 2021.

What makes the above results truly exceptional is the continuing Covid-19 crisis in China and the quarantine procedures the various levels of government have put

in place making the transport of materials, employees and contractors over Provincial borders at the least, extraordinarily difficult and, at the most, impossible. Furthermore, China has prevented the entrance of any foreign national into the country who does not have a pre- existing work permit and then, only with 28 days hotel quarantine. What this reinforces in simple terms is the dedication and loyalty of both our on-site staff and our ex- pat staff. The former who, in effect, now live permanently at camp as they are wary of not being permitted to return to the Caijiaying Mine site should quarantine be imposed unilaterally at local, county, city or Provincial level. The latter ex-pats, who now spend 3 to 6 months away from their partners, children and extended family, allow the Company to keep operating. I should add, all this when there is a 30,000 person shortage in the Australian mining industry where most of our ex pat staff are based. In particular, and most of all, I would like to thank John Steel, our new Chief Operating Officer, Paul Benson, our Chief Geologist, and Wendy Zhang, our site Chief Financial Officer, for their Herculean efforts over the past 12 months. All these on- site and ex-pat individuals have displayed the extent of their loyalty and I am grateful on behalf of everyone involved with the Company.

Needless to say, the safety and welfare of the Company's workforce remains the overwhelming priority of the Company. Underground and surface operations operated safely and consistently in 2021 without any major incidents. With the Company's extensive Covid-19 pandemic controls, there have been no outbreaks of Covid-19 at the Caijiaying Mine to date. With assistance from local Chinese authorities all personnel have received Chinese manufactured Covid-19 vaccinations.

Operational highlights throughout the year included the acquisition of land for the construction of new Tailings Dam 4 and the completion of the construction of the bridge to provide access to the area, the installation and extension of the paste pipe reticulation system and the continuation of the programme to further modernise and increase safety at the Caijiaying Mine. This included the introduction of 10 specific PRC Kuang Anquan ("KA") wet brake vehicles for personnel transportation underground, further increasing mine safety, traffic management and the underground environment. In addition, a new 40 tonne low emission boiler used to heat the site processing, administration and other buildings as well as the underground workings was

4

commissioned and a new electrical boiler was installed and commissioned at the Caijiaying Mine Camp reducing the Company's carbon emissions footprint.

Importantly, probably the most significant non-operational event of the past year was the activism of the major shareholders of the Company to effect change at the board level with the intention of seeking to extract greater value from the Company and their shareholding. To that end, 3 new independent directors were appointed to the board. Clive Whiley was appointed to the board in August 2021 and Linda Naylor and Dean Moore in May 2022. I would like to welcome all 3 formally to the board and wish them every success and a productive and enjoyable time on the board.

With this substantial change to the board I'd like to state that I will always be enormously grateful and humbled by the contribution and comradery the directors, whom I'm proud to call "my friends", gave so freely, warmly, genuinely and passionately. It made this impossible dream possible and bearable and I shall always be so grateful I had this journey

Report and Accounts 2021

with these amazing individuals - the deceased Rupert Crowe and Bill Mulligan, the mining thoroughbred Dal Brynelsen and the indefatigable Roger Goodwin. To quote Bill Curry, an American football star, "It's not for the bucks that I drive myself to the limits of my ability. It's so that I can go back to the locker room, after having gone those last 35 yards and won the game and walk back in there with my arm around a teammate and know that we did that together, that we both gave it a little more than we really had. Now that may sound real phony but I promise you it's the reason we play."

To the shareholders, my overwhelming wish is that Covid-19 disappear from concern, that there be peace in Eastern Europe, the World economy avoids severe recession and inflation, that the zinc price remains high and Zone II hits our long awaited full production target. May the Year of the Tiger make it just so.

Mladen Ninkov

Chairman

12 May 2022

5