Zijin Mining Group Co. (2899), China’s biggest gold miner by value, dropped the most in three years after saying first-half profit may fall as much as 55 percent. Its Asian peers also declined amid slumping prices.
Zijin shares fell as much as 11.4 percent to HK$1.4 today in Hong Kong, set for the biggest decline since July 13, 2010. They traded at HK$1.43 as of 10:51 a.m. local time. Net income will probably decrease by a range of 45 percent to 55 percent because of big declines in gold and copper prices, rising production costs and a drop in inventory value, Zijin said in an exchange filing July 5.
The forecast indicates Zijin may report a profit of between 1.07 billion yuan and 1.31 billion yuan in the six months ended June 30, the lowest first-half earnings since at least 2008, according to Bloomberg calculations based on profit of 2.38 billion yuan for the first-half of 2012. Gold slumped 27 percent this year, tumbling into a bear market in April, and is headed for its first annual decline since 2000.
Zijin forecast “very poor results, below expectations” because of the depletion of its Zijinshan reserves and the high cost of operating Australia’s Norton Gold Fields Ltd. (NGF) it bought last year, UOB Kay Hian Ltd. analyst Helen Lau said today in an e-mailed note. “Gold price is unlikely to recover in the second half of 2013 from end-June level because of low inflation pressure and a strengthening dollar.” Lau will review her “buy” recommendation, she said in the note.
Other gold companies also dropped. Melbourne-based Newcrest Mining Co. (NCM) plunged as much as 8.8 percent to AU$9.79 in Sydney, set for the biggest drop since Sept. 26, 2011. Zhaojin Mining Industry Co. (1818) fell 5.6 percent to HK$4.57 in Hong Kong, while Zhongjin Gold Co. fell 3.6 percent to 9.20 yuan in Shanghai.
Gold for immediate delivery declined 0.4 percent to $1,218.89 an ounce as of 10:36 a.m. Shanghai time. Prices dropped to $1,208.58 on July 5, the lowest since June 28, declining for a third week.
Bullion slid 23 percent last quarter as some investors lost faith in the metal as a store of value after Bernanke said the Fed may slow asset purchases this year if the economy continues to improve.
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