Zhaojin on 1.25b yuan resources spree

PUBLISHED : Wednesday, 27 March, 2013, 12:00am
UPDATED : Wednesday, 27 March, 2013, 5:44am


Zhaojin Mining Industry plans to spend 1.25 billion yuan (HK$1.54 billion) this year on exploration and mine acquisitions, aiming to boost resources by 18.8 per cent.

Shandong province's biggest gold miner had budgeted 1 billion yuan for acquisitions to bring in 50 tonnes of resources, said chairman Lu Dongshang.

It has also set aside 250 million yuan for exploration that it hopes will add 80 tonnes of new resources. It had 690 tonnes of resources, of which 355.8 tonnes proved recoverable reserves at the end of last year.

All of its assets are on the mainland, except for the 8.95 per cent stake in Australia-listed Norseman Gold it bought in August.

"Our acquisition focus is on the mainland," Lu said. "China's resources potential is huge … while the western, northern and southeastern regions [are underexplored]."

Zhaojin has spent around 2.4 billion yuan since May 2011 buying 11 exploration and mining assets. The firm posted a 15.8 per cent rise in net profit to 1.92 billion yuan for last year.

Revenues jumped 32.4 per cent to 7.6 billion yuan on the back of a 13.5 per cent rise in mine-produced gold to 18.1 tonnes and a 25.5 per cent rise in output from smelting and processing of gold mined by other firms to 9.6 tonnes.

The average gold price on the Shanghai Gold Exchange last year rose 3.75 per cent last year from 2011. Zhaojin's selling price was slightly higher than that on the exchange for most of last year due to inventory management.

Total production cost per tonne was flat year on year at US$611.4 an ounce. The international gold price averaged US$1,669 an ounce last year.