Hengxing to produce 30pc more gold after upgrading facilities
Company aiming to improve its recovery rate to 67 per cent this year from 57 per cent in 2016
Hengxing Gold Holding, a miner of the precious metal in northwestern China, said it is aiming to boost output by 30 per cent this year by substantially raising the recovery rate of gold from processed ore.
“We are expecting a recovery rate of 67 per cent this year, which is higher than our earlier expectation, thanks to upgrades in our processing facilities,” Hengxing’s chairman Ke Xiping said in an interview with the South China Morning Post. “We can achieve this by crushing ore pellets down to as small as 5.5 millimetres to increase our gold recovery, compared to the previous lowest achievable size of 6.3mm.”
The recovery rate, the amount of sellable gold produced from each unit of ore processed, was 57 per cent last year, an improvement from 53 per cent in 2015.
Ke is a former major shareholder and mining contractor of fellow Xiamen-based Zijin Mining Group, China’s largest gold miner, with projects both in China and overseas.
Hengxing, which operates the Gold Mountain mine in Xinjiang, was listed in Hong Kong in 2014. Its 2016 net profit quadrupled to 203 million yuan (US$29.4 million) from 53.6 million yuan in 2015, bolstered by a 12 per cent increase in the average selling price of gold and lower production costs. A 53 per cent surge in production to about 2.07 tonnes also helped as ore processing capacity was ramped up after trial operation began in 2015.
Ke said Hengxing was aiming for 2.7 tonnes this year as the recovery ratio was boosted while the mine’s annual ore processing capacity would also be lifted to five million tonnes from 4.8 million.
Although gold output will be increased substantially this year, Ke expects the per-ounce total production cost to be steady compared to last year’s US$609.
This is because the firm will invest about 125 million yuan to build roads and prepare two other nearby areas for mining to start in the future.
Last year’s cost was much lower than US$850 an ounce in 2015, thanks to greater economies of scale that spread fixed costs like depreciation and management costs.
Ke said that even when the new mining areas came on stream, total ore processed at the mine would not exceed the annual capacity of five million tonnes since the company was aiming for relatively steady output through the mine’s 20-year production life.
Hengxing would put on hold a proposal to acquire from Ke two exploration assets in Shandong and Sichuan provinces because the reserves at the Shandong asset had yet to be independently proven while development of the Sichuan asset was opposed by local minority tribes, he said.
While the company has been assessing many potential acquisition opportunities both in China and abroad in the past few years, he said suitable projects were hard to come by and it would take a cautious stance on doing deals.
“Overseas projects are not easy to manage due to cultural, language and regulatory barriers while good resources in China available for sale are scarce,” he said.