Zijin plans 10pc gold output increase
Fujian-based Zijin Mining Group, the largest mainland gold miner in terms of market value, is planning to raise gold output 10 per cent. The move is to capitalise on the continuing rise in precious metals after the group announced a big jump in its profits last year.
The company's net profit surged 49.72 per cent to 2.55 billion yuan (HK$2.8 billion), largely driven by soaring gold prices.
Sales surged 39.26 per cent to 14.87 billion yuan for the year to December from 10.67 billion yuan the year before. Despite the strong results no final dividend was proposed.
Gold business contributed 59.68 per cent of total sales, and 59.47 per cent of net profit. The company said the average selling price of gold bullion rose 8.87 per cent from a year ago, to 171.14 yuan per gram, or about US$728.76 per ounce.
Early last week, the price of gold edged closer to US$1,000 an ounce in London, setting a record high as the dollar tumbled and as crude oil held near a record high.
Looking ahead, the group is aiming to produce 57.3 tonnes of gold this year, up 9.58 per cent from last year's 52.29 tonnes.
Of the total gold output, about 29.7 tonnes are produced from mines, and about 27.6 tonnes are processed gold.
'It is expected that the bullish gold market will continue this year,' said chairman Chen Jinghe.
Mr Chen believed the world's economic growth would slow this year due to the subprime mortgage crisis in the United States and the increase in future financial risk.
'The currency function of gold will become more important to the market. The investment in gold has been accelerated,' he said.
The company also plans to raise its copper metal output 24.88 per cent to 59,000 tonnes this year, from 47,244 tonnes last year.
However, the firm would reduce zinc metal production 6.3 per cent to 149,000 tonnes due to a glut in supply.
'The oversupply in zinc metal will significantly restrict further increases in the price of zinc,' Mr Chen said.
In December, the group's total borrowing amounted to 6.44 billion yuan with interest rates between 2.25 per cent to 7.49 per cent a year.
During the year, the group said it had completed 11 investment projects on the mainland amounting to about 1.48 billion yuan.
Shares of Zijin Mining dropped 2.33 per cent to close at HK$10.08 on Friday.
