CPM sees stable growth in gold prices

PUBLISHED : Wednesday, 10 April, 2013, 12:00am
UPDATED : Wednesday, 10 April, 2013, 3:57am

Gold mining and processing firm China Precious Metal Resources (CPM) expects gold prices to see stable growth this year, boosted by the ample liquidity in the market as a result of quantitative easing by central banks.

Gold prices this year are likely to hover at high levels, said Zhang Liwei, CPM's chief financial officer. "The global central banks' QE [quantitative easing] policies will continue to support gold prices. Meanwhile, central banks from emerging markets will keep buying gold for their reserves."

International gold spot prices rose 6.7 per cent to US$1,675 per ounce at the end of last year.

"It's difficult to predict gold prices, but I don't expect prices to fall as long as the global economic conditions remain uncertain," Zhang said, adding that ample liquidity might also fuel inflation.

Zhang expects demand for gold to increase as the precious metal is one of the investment tools for weathering inflation. But a drop in gold prices would have little impact on the company's margins, he added.

Gold production, from five mines in Henan, Yunnan and Inner Mongolia, amounted to 124,000 ounces last year, an increase of 42 per cent from 2011.

Zhang said CPM would maintain above-average growth in gold output this year.

Zhang Shuguang, the chief executive of CPM, said the company would continue to seek acquisition opportunities. "But this year we will focus on consolidating resources in Yunan and Henan, so the capital expenditure will be less than last year," he said.

CPM's revenue grew 45.3 per cent to 1.63 billion yuan (HK$2.04 billion) last year, while profit rose 6.63 per cent to 445 million yuan as costs incurred in expansion partly offset profits.