Fosun Group

Zhaojin net increases 8pc amid curb on sales

PUBLISHED : Friday, 10 August, 2007, 12:00am
UPDATED : Friday, 10 August, 2007, 12:00am


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Zhaojin Mining Industry, the second-largest Hong Kong-listed mainland gold miner in terms of reserves, said first-half profit rose a less than expected 8.25 per cent as it kept about 405 kilograms of gold as inventories in June in anticipation of better prices in July.

Net profit for the six months to June increased to 159.3 million yuan from 147.2 million yuan a year earlier, the Shandong-based company said yesterday. Sales increased a mere 0.23 per cent to 529.9 million yuan during the period. The company did not declare an interim dividend.

Chief financial officer Zhang Banglong said the company's first-half profit should have increased by 22.5 million yuan to 182 million yuan or a 23.8 per cent year-on-year growth had the company offloaded the 405 kg of gold, about 20 days of its production.

'It is the industry cycle that the gold price always falls in late June and rebounds in July, thus we kept about 405 kilograms of gold as inventories and sold it in July,' Mr Zhang explained.

He said the gold price was 154 yuan to 156 yuan per gram in late June but rebounded to 162 yuan to 164 yuan per gram early last month. But Mr Zhang also stressed that Zhaojin would not keep more than 30 days of daily production as inventories, to avoid any risks that might arise.

From January to June, Zhaojin produced 26.11 per cent more gold to 9,360 kg, of which 4,590 kg was mine-produced by the company and the rest was smelting and processing services for other gold miners, from which Zhaojin receives a processing fee.

The company sold 4,185 kg of mine-produced gold - which it said was about the same as last year - at an average selling price of 161.65 yuan per gram, up 7.2 per cent from 150.79 yuan per gram in the same period last year.

Zhaojin, which as of the end of June had 132.13 tonnes of gold reserves, said it aimed to increase its stash to more than 160 tonnes by the end of this year and to increase its exploration rights by 50 per cent to cover an area of more than 900 square metres, from 600 square metres as at the end of June.

Chairman Lu Dongshang said the company had set aside 800 million yuan to 1.2 billion yuan for capital spending this year, a large part of which will be used to acquire gold mines or rights to explore and exploit potential mines.