Zhaojin to invest 500m yuan after profit growth

PUBLISHED : Monday, 09 March, 2009, 12:00am
UPDATED : Monday, 09 March, 2009, 12:00am

Gold producer Zhaojin Mining Industry said it will invest 500 million yuan (HK$567.87 million) to buy gold resources and boost production capacity this year after reporting 37.45 per cent growth in net profit last year.

The company, which operates mines in Shandong province, said it intended to acquire 20 tonnes of gold resources and gold mine production capacity of 1,250 kilograms per year for expansion.

The proposed investment was less than the 779.92 million yuan it invested last year for exploration, including gold resources of 31 tonnes and gold mine production capacity of 937.5 kg per year.

'This year will be an important one for the group to seize every opportunity and develop proactively amid the weakening environment,' the company said in a filing to the Hong Kong stock exchange yesterday.

Zhaojin yesterday said net profit for the year to December rose to 533.905 million yuan, compared with 388.45 million yuan a year earlier.

Turnover jumped 42.35 per cent to 2.15 billion yuan, from 1.51 billion yuan, because of increases in the price of gold and the amount of gold it sold over the year.

Compared with the volatility experienced by other commodities, the price trend for gold was relatively stable last year.

The average international spot price of gold last year was US$871.96 per ounce, representing an increase of 26.4 per cent over the average price of US$689.89 in 2007.

The company's gross profit margin improved to 50.16 per cent from 49.91 per cent.

However, gold output totalled 17,619kg, down from 19,364kg recorded in 2007.

At the end of December, cash on hand stood at 688.76 million yuan, sharply down from 1.63 billion yuan 12 months earlier as a result of investments for expansion.

Outstanding bank loans and other borrowings totalled 478.98 million yuan, up from 375.59 million yuan a year earlier.

A final dividend of 16.6 fen per share was declared.