Zijin Mining Posts Lowest Profit Since 2006 on Gold Price Slump

Zijin Mining Group Co. (2899), China’s biggest gold miner by market value, posted the lowest first-half profit since 2006 after bullion and copper prices dropped and production costs increased.

Net income fell 54 percent to 1.1 billion yuan ($179.7 million) for the six months ended June 30, from 2.4 billion yuan a year earlier, the Shanghang, Fujian province-based company said in a statement today, citing Chinese accounting standards. The company last month said interim profit would probably decrease by between 45 percent and 55 percent. Sales increased 24 percent to 26 billion yuan.

That’s the lowest first-half profit since 2006, when the company reported interim earnings of 662 million yuan, according to data compiled by Bloomberg. Gold slumped 20 percent this year, entering a bear market in April, and headed for its first annual decline since 2000.

“Gold prices are still expected to trend lower after rebounding from excessive declines,” the company said, citing a strong dollar and China’s economic slowdown. The company’s “full-year result may see a relatively large fall from last year.”

The company recorded 332.1 million yuan in impairment losses in the first half after declines in gold and other metal prices trimmed the value of inventories, compared with 375 yuan a year earlier, according to today’s statement.

Zijin dropped 1.1 percent to close at HK$1.84 in Hong Kong trading, compared with a 1.2 percent gain in the benchmark Hang Seng Index. (HSI) The stock has declined 40 percent this year. Its Shanghai-traded shares slid 0.8 percent today.

Gold for immediate delivery declined 0.2 percent to $1,336.15 an ounce as of 4:13 p.m. Shanghai time. Prices dropped to $1,200.65 on June 27, the lowest level since Aug. 2010.

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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