Gold producer Zhaojin Mining Industry saw net profit surge 40 per cent last year and says it expects gold prices to continue to climb this year with developed economies maintaining their low interest rate environments.
Net profit rose to 751.33 million yuan (HK$854.56 million) from 538.12 million yuan in 2008 as revenue increased 30 per cent to 2.8 billion yuan.
The firm acquired 7.4 square kilometres of mining area last year, taking its total to 61.01 sq km, while newly acquired exploration area increased 90.3 sq km to 1,345 sq km. Its key mines are in Shandong, Xinjiang and Gansu.
Zhaojin, the country's largest gold smelter, said its average sale price of gold last year was 221.56 yuan per gram, or US$1,009 per ounce, a 14.68 per cent rise from the year before.
Chairman Lu Dongshang expects gold prices to rise this year as low interest rates look set to continue in developed economies and investors diversify from US dollar and euro-denominated holdings. However, he warned that prices could be more volatile than in 2009 and that for every 1 per cent that gold fluctuates, it affects Zhaojin's gross profit margin by about 2.04 per cent.
Zhaojin's gross profit margin rose from 50.16 per cent in 2008 to 51.82 per cent last year.