Real Gold Mining has set up three teams to scour for acquisition targets in the mainland's resource-rich regions and will only consider buying those with at least 20 per cent of potential return on assets. Chief financial officer Cui Jie said the privately controlled miner has an Inner Mongolia-based unit covering acquisition targets in Inner Mongolia, Xinjiang, Hebei, Liaoning, Jilin and Heilongjiang. Another unit deals with targets in Yunnan, Guangxi, Guizhou and Sichuan, while a third controls efforts in Shaanxi, Henan, Gansu and Jiangxi. 'We looked at almost 20 projects last year, some we cast aside, some are in the process of due diligence while others are under further negotiations,' he said. Real Gold, the smallest Hong Kong-listed miner by output, is expected to boost production by 38 per cent this year. Last week the company posted a 407 per cent jump in net profit to 526.7 million yuan (HK$598.6 million) for last year. Chairman Lu Tianjun said the company has a daily ore processing capacity of 2,580 tonnes after an expansion was completed in November, and is expected to operate around 305 days this year, with a gold recovery rate of 86 per cent. Based on its three Inner Mongolia mines' weighted average grade of 6.75 grams of gold output per tonne of ore processed, it can produce 160,792 ounces of gold this year, based on calculations by the Post, up from 116,800 ounces last year. Output will be boosted next year by the expected start-up of the Fuyuan mine in Yunnan, which will have an annual output capacity of 38,720 ounces. In 2012, production will be enhanced by the coming on stream in next year's second half of the Jinshi mine in Jiangxi province, with the capacity to churn out 10,560 ounces a year. Both Fuyuan and Jinshi were bought in recent months. In addition to gold, Real Gold also extracts other metals, primarily silver, copper and zinc and lead, which accounted for roughly 30 per cent of revenues last year. Cui said the primary requirement for acquisition targets is a potential return rate of more than 20 per cent over assets. This compares with Real Gold's own return of 22.4 per cent last year. Another criterion is the resources of target mines. 'Theoretically the more resources the better, but then this often means a higher price,' Cui said. 'Still, sometimes the sellers do not have a complete understanding of the mine's resource potential, hence we can use relatively little money to buy an asset that can be further developed.' Lu said the central government encourages large gold miners to acquire small and medium-sized ones. However, Beijing still welcomes well-heeled and experienced new entrants and has not set consolidation targets or thresholds to eliminate inefficient players in the industry.