Kingold Jewelry Signs $40.2 Million Gold Leasing Agreement with China
Agreement to Provide Growth Capital for Kingold's Investment Gold Business
WUHAN CITY, China, Jan. 16, 2013
WUHAN CITY, China, Jan. 16, 2013 /PRNewswire/-- Kingold Jewelry, Inc.
(NASDAQ: KGJI), ("Kingold" or the "Company"), one of China's leading
manufacturers and designers of high quality 24-karat gold jewelry, ornaments
and investment-oriented products, today announced that the Company has signed
a Gold Leasing Agreement ("Agreement") with China Construction Bank's ("CCB")
Wuhan Jiang'An branch.
The Agreement is similar to a revolving credit line, with CCB providing
Kingold a reusable credit line of up to RMB250 million (approximately US$40.2
million); however, draw downs under the facility (and repayment thereunder)
will be made in gold rather than currency.Gold loans under the facility will
bear interest at a rate of approximately 6% p.a., with interest based on the
actual weight of gold loaned under the facility (in grams), the price of gold
(yuan/gram), in addition to the rate and number of days the gold was loaned
under the facility.The initial line of credit is available until October 26,
2013.Because the market price of gold may fluctuate during the term of the
Agreement, Kingold and CCB have agreed to a cap of 95% on the credit line
based on the actual value of gold loans outstanding at any time under the
Kingold anticipates utilizing this access to additional gold reserves to
accelerate the turnover of capital and inventory, to further develop its 24K
gold jewelry and investment gold business by expanding market share, as well
as further improving its leading position in the 24k gold processing
industry.Working capital shortages limited further development, caused some
shortfall in production, and impacted the Company's ability to meet increased
demand from customers. This new Agreement with CCB, one of China's leading
commercial banks, is expected to allow the Company to gain additional gold and
address its working capital needs.
Mr. Zhihong Jia, Chairman and CEO of Kingold Jewelry, Inc. stated, "The
signing of this agreement with CCB is strategically important for Kingold's
development as it provides our company with a new source of gold and eases
pressure on cash flow, which accelerates our ability to seize market
opportunities in China's booming 24K gold consumer goods market. We believe
this innovative gold credit line from CCB will certainly elevate our 24K gold
jewelry business and assist us in taking our emerging investment gold business
to the next level."
Chairman Jia continued, "We are honored to be partnering with China
Construction Bank's Wuhan Jiang'An branch and look forward to utilizing the
leased gold to maximize its economic benefit by producing high quality 24K
gold products and continuously delivering returns to Kingold's shareholders
and business partners."
About Kingold Jewelry, Inc.
Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan City, China's
fourth largest city, was founded in 2002 and today is one of China's leading
designers and manufacturers of 24-karat gold jewelry, ornaments and
investment-oriented products.The Company sells both directly to retailers as
well as through major distributors across China. Kingold has received numerous
industry awards and has been a member of the Shanghai Gold Exchange since
2003. For more information, please visit www.kingoldjewelry.com.
Business Risks and Forward-Looking Statements
This press release contains forward-looking statements that are subject to the
safe harbors created under the Securities Act of 1933 and the Securities
Exchange Act of 1934. These include statements regarding accelerating the
turnover of capital and inventory, developing the 24K gold jewelry and
investment gold business, improving its position in the 24k gold processing
industry, improving its working capital requirements, seizing market
opportunities in the 24k gold consumer goods market and development and
expansion of the investment gold business.Readers are cautioned that actual
results could differ materially from those expressed in any forward-looking
statements. In addition, please refer to the risk factors contained in
Kingold's SEC filings available at www.sec.gov, including Kingold's most
recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers
are cautioned not to place undue reliance on any forward-looking statements,
which speak only as of the date on which they are made. Kingold undertakes no
obligation to update or revise any forward-looking statements for any reason.
Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)
The Equity Group Inc.
Adam Prior, Vice President
Katherine Yao, Account Associate
SOURCE Kingold Jewelry, Inc.
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