Companies

Zhongjin posts 61% increase in Q1 net income

By Gao Changxin (China Daily)
Updated: 2011-04-26 11:12

Zhongjin Gold Corp, the listed arm of China National Gold Group Corp, saw a jump in income from high gold prices.[Photo / China Daily]

SHANGHAI - Zhongjin Gold Corp, the listed arm of China National Gold Group Corp (CNGGC), said its first-quarter net income jumped by more than half on increased production and higher gold prices, which reached a new record on Monday.

In a statement to the Shanghai Stock Exchange, China's second-largest bullion producer by market value said its net income surged 61.16 percent to 310 million yuan ($47.55 million) or 0.218 yuan a share.

Related readings:  Zhongjin Gold Q1 profits likely to rise more than 50%  Zhongjin Gold 2010 profit doubles on higher gold prices  Zhongjin acquires two gold mines from parent

The results continued the gold producer's strong 2010 performance, when it posted a 115.7 percent increase in net income to 1.1 billion yuan and revenue rose 15.69 percent to 21.6 billion.

Zhongjin's performance is in line with other gold producers in China, all of whom are seeing increased profit driven by the rising price of gold.

Shandong Gold Mining Co Ltd saw its first-quarter net income jump by 65.22 percent to 443 million yuan. Fujian-based Zijin Mining Group Co Ltd, which experienced a major pollution accident in 2010, saw net income increase by 40 percent to 1.3 billion yuan.

The global gold price has gained significantly since last year as a weakening dollar and fragile global economic recovery prompted investors to turn to the precious metal as a safe haven.

On Monday, gold for immediate delivery rose 0.7 percent to a record $1,517.98 an ounce, more than three times the price in 2002.

The record follows the one set last week, when the price of gold spiked to $1,497 an ounce, and after Standard and Poor's downgraded the outlook of the US' credit rating from "stable" to "negative".

The record gold prices have come in conjunction with declines in the stock market.

Wang Qianming, who rates Zhongjin a "buy" at Everbright Securities, expects the gold price to surge past $1,600 an ounce this year and Zhongjin's earnings per share to top 1 yuan this year, up from 0.79 yuan in 2010.

In a development that is set to boost its gold production, Zhongjin said earlier this month that it plans to take over all of CNGGC's gold-mining assets over a five-year period, which Wang says will boost the company's performance.

Last year, Zhongjin acquired stakes in three domestic gold mines from CNGGC after a private placement.

Zhongjin produced 19.7 tons of unpurified gold in 2010 and board secretary Li Yueqing said last year that gold production will increase 20 percent this year.