Zhaojin to extend its golden touch

PUBLISHED : Tuesday, 16 August, 2011, 12:00am
UPDATED : Tuesday, 16 August, 2011, 12:00am

Zhaojin Mining Industry, Shandong province's largest gold miner, is in talks to acquire assets in North America, Australia and north China, and aims to close deals worth 380 million yuan (HK$463 million) in the second half of this year.

The Zhaoyuan-based firm is in early negotiations on the overseas assets, whose acquisition will take longer to realise compared to domestic acquisitions as the due diligence process is more complicated, said chairman Lu Dongsheng.

It is also in talks to buy mining rights in Xinjiang and Inner Mongolia autonomous regions, Gansu and Shandong provinces. Progress in areas close to its existing mines is more advanced.

In the year's first-half, Zhaojin completed 120 million yuan of acquisitions, including a gold mining project and a minor stake increase in another project, both in Xinjiang.

Last year, it executed acquisitions worth 784 million yuan on the mainland and bought a small stake in Australian miner Citigold for around 11.5 million yuan.

The company on Sunday posted a 28.3 per cent year-on-year rise in first-half net profit to 720.13 million, on the back of a 12.3 per cent rise in self-mined gold output to 7.63 tonnes and a 19 per cent jump in average selling price to 314 yuan per gram.

Gold smelting and processing volume grew 10.7 per cent to 3.8 tonnes. Overall gross profit margin was dragged down to 52.3 per cent from 61.2 per cent by an increase in sales contribution from non-gold and smelting of third-party sourced gold operations, which command much lower profit margins.

'Excluding these factors, our self-mined gold's gross margin has been steady at 61.2 per cent from the year-earlier period,' chief financial officer Zhang Banglong said.

Lu said Zhaojin will not waver from its strategy to be a miner focusing on gold, with the production of by-products silver, copper, lead and sulphuric acid forming only a complementary business.

This was being done so as not to waste the resources that co-exist with gold.

Zhaojin has maintained its target set in March to produce 15.9 tonnes of self-mined gold this year.

A 33-day mine closure in Zhaoyuan in January and February due to tightened safety requirements had cut output amounting to just over 6 per cent of this year's target.

Last month, mines in the city including Zhaojin's were again ordered to shut for five days for safety checks due to an accident involving another mining company.

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The mainland's total gold output in tonnes in the first half of this year, an increase of 3.25 per cent or 5.18 tonnes year on year

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