Zhaojin Mining Industry cuts spending after sharp profit drop
April 3, 2014 Category Automotive Metals & Minerals, Minerals
Zhaojin Mining Industry has cut spending on capacity expansion this year and turned more cautious on acquisitions, after it posted a worse-than-expected 61.8% net profit drop for last year to CNY734.1 million. The Zhaoyuan-based firm, Shandong province’s largest gold miner, has budgeted CNY1.9 billion for capital expenditure this year, compared with CNY3.3 billion spent last year. Chairman Weng Zhanbin said most of the scale-back was from spending on a smelting facilities upgrade, which has been cut to CNY200 million from CNY1.5 billion. “This is because we have completed our major upgrade projects,” Weng said, adding the company also planned to reduce mine construction expenditure to CNY985 million from CNY1.31 billion. Scaling back investment was part of the firm’s efforts to raise efficiency as it sought to shift its expansion focus from chasing after scale and speed to quality, Weng said. The average price on the Shanghai Gold Exchange fell 16.8% last year, which more than offset a 12.1% rise in output from Zhaojin’s own mines. It plans to raise output of its mines by 10.3% this year to 536,300 ounces. Total gold output, including smelting of gold ore sourced from third parties, rose 4.2% and is targeted to rise 2.5% this year to 950,500 ounces. It aims to keep the rise in production cost within 10% this year, after it rose 10% to USD672.40 an ounce.
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