Kingold Jewelry Reports 2013 Third Quarter Financial Results

         Kingold Jewelry Reports 2013 Third Quarter Financial Results

Company to Hold Conference Call with Accompanying Slide Presentation on
November 15, 2013, at 8:30 a.m. ET

PR Newswire

WUHAN, China, Nov. 14, 2013

WUHAN, China, Nov. 14, 2013 /PRNewswire/ -- Kingold Jewelry, Inc. ("Kingold"
or "the Company") (NASDAQ: KGJI), one of China's leading manufacturers and
designers of high quality 24-karat gold jewelry, ornaments and
investment-oriented products,  today announced financial results for its third
quarter and nine months ended September 30, 2013.

2013 Third Quarter Financial and Operating Highlights (Comparisons are to 2012
Third Quarter):

  oNet sales increased 28.6% to $283.9 million compared to $220.8 million,
    largely as a result of increased production.
  oProcessed 13 metric tons [one metric ton = 35,274 ounces] of 24-karat gold
    products compared to 9.5 metric tons.
  oGross profit increased to $18.1 million from to $12.7 million, and gross
    margin was 6.4% compared to 5.7%, due to increased production as a result
    of greater access to gold through the Company's gold leasing transactions.
  oNet income attributable to common shareholders increased 31.4% to $11.0
    million, or $0.17 per diluted share, from $8.4 million, or $0.15 per
    diluted share.
  oCash flow from operations of $6.3 million for the nine months ended
    September 30, 2013
  oBook value per diluted share of $3.18 at September 30, 2013 compared to
    $2.97 at December 31, 2012.
  oKingold expects to process between 50-55 metric tons of 24-karat gold
    products in 2013. The Company processed 36.8 metric tons during the first
    nine months of 2013.
  oManagement to travel to the United States for meetings in New York and
    Boston during the week of November 18- 22 (details below).

Management Comments

Mr. Zhihong Jia, Chairman and CEO of Kingold, stated, "We have begun to
realize the benefit of the gold leasing transactions entered into this year.
As a result of increased access to gold, we have greater flexibility to expand
our production capacity at favorable times in the market cycle. This has
allowed Kingold to achieve higher margins, increase its cash flow from
operations, and better manage its operations during the period. Throughout
the first nine months of 2013, there has been considerable pressure on global
gold pricing. While this has created challenges for Kingold and a number of
gold manufacturers, we feel this presents a potential long-term opportunity to
win market share from some of our less capitalized competitors. We believe
the third quarter's strong sales and margin expansion despite this pressure on
pricing demonstrates our ability to execute throughout varying market cycles.
We are revising our 2013 sales volume guidance to provide for a tighter range
of between 50-55 metric tons in 2013 and as a result expect to produce strong
fourth quarter year-over-year improvements in production."

Chairman Jia continued, "Subsequent to the quarter, we reached a milestone
agreement that we feel is key for Kingold's long-term growth. We entered into
an acquisition agreement to acquire 66,666 square meters (717,587 square feet)
of industrial land for use in the development of Wuhan Kingold Jewelry
International Industry Park. This is expected to be a major commercial complex
where businesses in the jewelry industry and consumers can come together, with
manufacturing, wholesale, and retail shopping. We plan to move part of our
production facility to this industrial park, which will provide Kingold with
greater flexibility to expand production levels. We are very excited about
this project and look forward to updating investors on our progress."

Update on Gold Lease Transactions

On October 24, 2013, the Company announced an increase in the credit line
established under its previously disclosed gold leasing agreement with China
Construction Bank's Wuhan Jiang'An branch ("CCB"), dated December 20, 2012,
whose term was extended until July 22, 2014 (the "Gold Leasing Agreement").
Kingold's total credit line under the Gold Leasing Agreement with CCB is now
RMB400 million (approximately US$65.4 million), an increase of RMB150 million
from the original credit line of RMB250 million.

During the first nine months of 2013, the Company signed a new gold leasing
agreement with the Wuhan branch of Shanghai Pudong Development Bank Ltd. ("SPD
Bank") (under its previously disclosed framework agreement) and entered into a
new similar gold leasing arrangement with the Wuhan branch of CITIC Bank
Corporation Limited ("CITIC Bank"). The Company leased the gold as a way to
fuel its growth and will return the same amount of gold to CCB, SPD Bank, and
CITIC Bank at the end of the respective lease agreements.

Development of Wuhan Kingold Jewelry Industrial Park

On October 23, 2013, subsequent to the end of the quarter, the Company entered
into an acquisition agreement to acquire from Wuhan Huayuan Science and
Technology Development Limited Company the operating rights for 66,666 square
meters (717,587 square feet) of industrial land for use in the development of
Wuhan Kingold Jewelry International Industry Park in the Jiangan district,
Wuhan (the "Park"), for approximately RMB1.0 billion (approximately USD$164
million at current exchange rates) .

The Company expects construction of the Park to be completed by mid-2015. The
construction of the Park is anticipated to be an integral part of the
Company's long-term growth strategy as the Company expects that it will create
a major hub for the jewelry industry in the central region of China. Kingold
intends to update investors as the project progresses.

Operational Review

In the third quarter of 2013, Kingold processed a total of 13.0 metric tons of
24-karat gold products compared to 9.5 metric tons processed in the prior year
period. The Company's net sales consisted primarily of sales of branded
products to wholesale and retail customers, as well as fees generated from
customized production (as detailed in the table below). Of the 13.0 metric
tons processed during the period, Kingold's branded production accounted for
7.2 metric tons (55.2%) and customized production accounted for 5.8 metric
tons (44.8%). In the third quarter of 2012, Kingold processed a total of 9.5
metric tons of gold, of which branded production accounted for 4.6 metric tons
(48.6%) and customized production accounted for 4.9 metric tons (51.4%).

In the first nine months of 2013, the Company processed a total of 36.8 metric
tons of gold, of which branded production accounted for 20.3 metric tons
(55.2%) and the customized production accounted for 16.5 metric tons (44.8%).
In the first nine months of 2012, Kingold processed a total of 30.2 metric
tons of gold, of which branded production accounted for 14.7 metric tons
(48.8%) and customized production accounted for 15.5 metric tons (51.2%).

Metric Tons of Gold Processed
                 Three Months Ended:
                  September 30, 2013  September 30,
                                               2013
Branded*        7.2            55.2%          4.6             48.6%
Customized**    5.8            44.8%          4.9             51.4%
Total           13.0           100%           9.5             100%
                 

                 Nine Months Ended:
                  September 30, 2013   September 30,
                                               2012
Branded*        20.3           55.2%          14.7            48.8%
Customized**    16.5           44.8%          15.5            51.2%
Total           36.8           100%           30.2            100%
* Branded Production: The Company purchases gold from the Shanghai Gold
Exchange to produce branded products.

** Customized Production: Clients who purchase customized products supply gold
to the Company for processing.

2013 Third Quarter Financial Review

  oNet sales for the three months ended September 30, 2013 was $283.9
    million, an increase of $63.1 million, or 28.6%, from $220.8 million for
    the three months ended September 30, 2012. The increase in net sales was
    primarily driven by increased production of $98.1 million, offset by
    approximately $40.1 million due to the decrease in the price of gold, with
    the remaining increase due to the translation gain from RMB into USD.
  oGross profit for the three months ended September 30, 2013 was $18.1
    million, an increase of $5.5 million, or 43.2%, from $12.7 million for the
    same period in 2012. Gross margin for the three months ended September
    30, 2013 was 6.4% compared to 5.7% for the same period in 2012. The
    increase in gross profit and gross margin was primarily due to increased
    production and higher processing fees for customized production in the
    three months ended September 30, 2013.
  oNet income attributable to Kingold shareholders for the third quarter of
    2013 increased 31.4% to $11.0 million, or $0.17 per diluted share based on
    64.5 million weighted average diluted shares outstanding, from $8.4
    million, or $0.15 per diluted share based on 54.2 million diluted shares
    outstanding, in the prior year period.

Fiscal 2013 Nine Month Financial Review

  oNet sales for the nine months ended September 30, 2013 was $872.3 million,
    an increase of $158.0 million, or 22.1%, from $714.3 million in prior year
    period. The increase in net sales was primarily driven by increased
    production, offset by approximately $86.7 million due to the decrease in
    the in the price of gold, with the remaining increase due to gains from
    exchange rate fluctuations.
  oGross profit for the nine months ended September 30, 2013 was $35.6
    million, compared to $39.2 million in the prior year period. The
    Company's gross margin for the nine months ended June 30, 2013 was 4.1%
    compared to 5.5% for the prior year period. The primary reason for the
    decrease in gross margin was that the unit processing fee for branded
    production was higher in the nine months ended September 30, 2012.
  oNet income attributable to Kingold shareholders for the nine months ended
    September 30, 2013 was $20.4 million, or $0.32 per diluted share based on
    63.3 million weighted average diluted shares outstanding, compared to net
    income of $25.3 million, or $0.47 per diluted share based on 54.2 million
    weighted average diluted shares outstanding, in the prior year period. 

Balance Sheet and Cash Flow

(in millions except for percentages)   9/30/2013 12/31/2012         % Change
Cash                                 $ 23.3      $       2.5 832%
Inventories (gold)                     169.4     150.0              12.9%
Working Capital                        193.1     149.2              29.4%
Short-term debt                        8.2       6.6                24.2%
Stockholders' Equity                   204.8     161.5              26.8%

Outlook for 2013

Kingold revised its 2013 guidance, and believes that the Company will process
between 50 metric tons and 55 metric tons of gold products in 2013. This
guidance is based solely on current projected, organic growth, and would
represent a 32.3% to 45.5% increase from the 37.8 metric tons processed in
2012.

Upcoming Investor Meetings

As previously announced, the Company's management team will be hosting
investor meetings and conducting media appearances throughout the week of
November 18^th in New York and Boston. The Company's management team will
present an overview of Kingold's operations, including a discussion of its
strategy and recent activities.

Conference Call Details

Kingold also announced that it will discuss financial results in a conference
call on Friday, November 15, 2013, at 8:30 AM ET.

The dial-in numbers are:

Live Participant Dial In (Toll Free):877-407-9038
Live Participant Dial In (International):  201-493-6742

The conference call will also be webcast live. To listen to the call, please
go to the Investor Relations section of Kingold's website at
www.kingoldjewelry.com, or click on the following link:
http://kingoldjewelry.equisolvewebcast.com/q3-2013. The Company will have an
accompanying slide presentation available in PDF format on its homepage prior
to the conference call.

About Kingold Jewelry, Inc.:

Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan 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 the amount of gold
to be processed in 2013, Kingold's ability to withstand global gold pricing
pressure and to win market share from its competitors that are less
capitalized than Kingold, Kingold's anticipated fourth quarter and 2013
production results, Kingold's plans for the construction and completion of the
Wuhan Kingold Jewelry International Industry Park (the "Park") to serve as a
major commercial complex, and Kingold's plan to move part of its production
facility to the Park and the greater production levels such move will
provide. 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.

Company Contact:
Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)
+86-27-6569-4977 (China)
Email: bl@kingoldjewelry.com
Investor Relations
The Equity Group Inc.             In China
Adam Prior, Senior Vice President Katherine Yao, Associate
(212) 836-9606                    +86 10-6587-6435
aprior@equityny.com               kyao@equityny.com



KINGOLD JEWELRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(IN US DOLLARS)
(UNAUDITED)
                  For the three months ended     For the nine months ended
                  September 30,                  September 30,
                  2013            2012            2013            2012
NET SALES       $ 283,890,000   $ 220,836,949   $ 872,340,210   $ 714,290,183
COST OF SALES
 Cost of sales    (265,440,712)   (207,868,634)   (835,851,327)   (674,193,265)
 Depreciation     (304,815)       (296,524)       (906,590)       (890,419)
      Total
      cost of     (265,745,527)   (208,165,158)   (836,757,917)   (675,083,684)
      sales
GROSS PROFIT     18,144,473      12,671,791      35,582,293      39,206,499
OPERATING
EXPENSES
 Selling,
 general and      1,143,882       756,674         3,139,638       3,165,658
 administrative
 expenses
 Stock
 compensation     375,002         379,450         1,133,790       1,047,355
 expenses
 Depreciation    36,293          36,710          110,286         104,584
 Amortization     26              2,983           6,080           8,958
      Total
      Operating   1,555,203       1,175,817       4,389,794       4,326,555
      Expenses
INCOME FROM       16,589,270      11,495,974      31,192,499      34,879,944
OPERATIONS
OTHER INCOME
(EXPENSES)
 Other Expense    -               -               -               (1,559)
 Interest         (1,361,674)     (113,298)       (3,112,596)     (336,212)
 expense
      Total
      Other       (1,361,674)     (113,298)       (3,112,596)     (337,771)
      Expenses,
      net
INCOME FROM
OPERATIONS        15,227,596      11,382,676      28,079,903      34,542,173
BEFORE TAXES
INCOME TAX
PROVISION
(BENEFIT)
 Current          3,402,482       3,016,059       8,197,780       9,280,633
 Deferred         830,419         -               (471,468)       -
 TOTAL INCOME     4,232,901       3,016,059       7,726,312       9,280,633
 TAX PROVISION
NET INCOME     $ 10,994,695    $ 8,366,617     $ 20,353,591    $ 25,261,540
OTHER
COMPREHENSIVE
INCOME
 Total foreign
 currency       $ 1,278,588     $ 1,700,761     $ 4,780,603     $ 752,777
 translation
 gains
COMPREHENSIVE   $ 12,273,283    $ 10,067,378    $ 25,134,194    $ 26,014,317
INCOME
Earnings per
share
 Basic          $ 0.17          $ 0.16          $ 0.32          $ 0.47
 Diluted        $ 0.17          $ 0.15          $ 0.32          $ 0.47
Weighted
average number
of shares
 Basic            64,334,400      53,578,218      63,073,008      53,286,072
 Diluted          64,486,938      54,246,563      63,310,034      54,200,552



KINGOLD JEWELRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN US DOLLARS)
(UNAUDITED)
                                                 September30,   December31,
                                                 2013            2012
ASSETS
CURRENT ASSETS
 Cash                                         $ 23,317,032    $ 2,544,114
 Restricted cash                                 4,335,470       -
 Accounts receivable                             280,561         692,762
 Inventories                                     169,380,149     150,041,421
 Other current assets and prepaid expenses       431,603         133,539
 Value added tax recoverable                     8,221,018       7,031,374
 Deferred income tax assets                      477,100         -
    Total Current Assets                         206,442,933     160,443,210
PROPERTY AND EQUIPMENT, NET                      11,022,487      11,683,987
OTHER ASSETS
 Other assets                                    157,131         153,029
 Intangible assets, net                          510,653         503,313
    Total other assets                           667,784         656,342
TOTAL ASSETS                                   $ 218,133,204   $ 172,783,539
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Short term loans                              $ 6,510,523     $ 6,340,551
 Other payables and accrued expenses             1,021,321       1,445,513
 Related party loan                              1,727,265       209,890
 Income tax payable                              3,422,526       2,587,680
 Other taxes payable                             621,669         659,989
    Total Current Liabilities                    13,303,304      11,243,623
COMMITMENTS AND CONTINGENCIES                   -               -
EQUITY
 Preferred stock, $0.001 par value, 500,000
 shares
    authorized, none issued or outstanding
    as of September 30, 2013 and December 31,    -               -
    2012
 Common stock $0.001 par value, 100,000,000
 shares
    authorized, 64,431,140 and 54,521,140 shares
    issued and outstanding
    as of September 30, 2013 and December 31,    64,431          54,521
    2012
 Additional paid-in capital                      75,802,554      57,656,674
 Retained earnings
  Unappropriated                                112,960,040     92,606,449
  Appropriated                                  967,543         967,543
 Accumulated other comprehensive income          15,035,332      10,254,729
    Total Equity                                 204,829,900     161,539,916
TOTAL LIABILITIES AND EQUITY                   $ 218,133,204   $ 172,783,539



KINGOLD JEWELRY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN US DOLLARS)
(UNAUDITED)
                                           For the nine months ended September
                                           30,
                                           2013                 2012
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                              $ 20,353,591      $    25,261,540
 Adjusted to reconcile net income to
 cash used in
    operating activities:
    Depreciation                           1,016,876            995,002
    Amortization of intangible assets      6,080                8,958
    Share based compensation               1,133,790            1,047,355
    Inventory valuation allowance          7,115,531            -
    Deferred tax provision (benefit)       (471,468)            -
 Changes in operating assets and
 liabilities
 (Increase) decrease in:
    Accounts receivable                    425,686              517,022
    Inventories                            (22,251,264)         (33,590,814)
    Other current assets and prepaid       (291,007)            15,269
    expenses
    Value added tax recoverable            (989,335)            (3,001,419)
 Increase (decrease) in:
    Other payables and accrued             (444,964)            81,959
    expenses
    Income tax payable                     756,440              1,572,629
    Other taxes payable                    (55,351)             (85,251)
    Net cash provided by (used in)         6,304,605            (7,177,750)
    operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment        (53,669)             (149,666)
    Net cash (used in) investing           (53,669)             (149,666)
    activities
CASH FLOWS FROM FINANCING ACTIVITIES
 Restricted cash                           (4,284,287)          -
 Proceeds from related party loan          1,501,252            -
 Net proceeds from stock issuance          12,522,000           -
 Net proceeds from exercise of             4,500,000            -
 warrants
    Net cash provided by financing         14,238,965           -
    activities
EFFECT OF EXCHANGE RATES ON CASH AND       283,017              142,448
CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH   20,772,918           (7,184,969)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF    2,544,114            8,810,173
PERIOD
CASH AND CASH EQUIVALENTS, END OF        $ 23,317,032      $    1,625,205
PERIOD
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
 Cash paid for interest expense          $ 3,235,628       $    354,686
 Cash paid for income tax                $ 7,441,340       $    7,708,004



SOURCE Kingold Jewelry, Inc.

Website: http://www.kingoldjewelry.com
Website: http://kingoldjewelry.equisolvewebcast.com/q3-2013