|By ACN Newswire||
|September 8, 2013 06:09 AM EDT||
Hong Kong, Sept 8, 2013 - (ACN Newswire) - The trend of the gold price is expected to change for the better due to unstable international economic situation. After United States Department of Labor announced that nonfarm payrolls increased less than expected in August, US dollar index has decreased significantly, and spot gold has risen by nearly 30 dollars, hitting an intraday high of US $ 1,392.60 / oz. In addition, the war on Syria is imminent. Gold companies are preparing for the rigid demand to pick up in 2H 2013.
Senior management of China Precious Metal Resources Holdings Ltd. (1194) forecasted in the 2013 interim results press conference that the gold price will remain stable in 2H 2013, and the gold prices look set to be optimistic in the long-term. The Mid-Eastern war, rising oil price, higher inflation and other uncertainties will highlight the value of gold as a hedging tool; while strong demand for gold in China's market would also play a supporting role. China Gold Association's data shows that in the first half of 2013 China's aggregate demand for gold was 706 tonnes, an increase of 54% YOY, while China's gold industry self-sufficiency rate was merely 27%, showing a larger gap between supply and demand.
Despite the lower gold price in the first half of 2013, the revenue of China Precious Metal still achieved 3% increase compared to the same period of last year to HK$ 666 million. The company's gross margin was 57% as gold prices plummeted; however, it was still higher than its peers. Gold production increased by 18% to 60 thousand ounces from 51 thousand ounces for the same period of last year. This production growth was also the highest among Chinese gold companies listed in Hong Kong.
China Precious Metal's gold mines are all located at the three main fold belts which are abundant in gold resources. The mines in Henan and Yunnan were in good operation when Hong Kong media was invited to visit in recent two years. China Precious Metal also emphasized that the company's average gold grade is 3.5 g / t, which is not only higher than global average grade of 1.5 g / t, but also the highest among peers. What's more, abundant work force in these areas enables the company to maintain a low-cost advantage and achieve a cash cost of US $ 361 / ounce in 1H 2013, which was much lower than the global average level of US $ 643 / ounce. Goldman Sachs has recently published a research report and in which the gold price forecast of 2H 2013 is raised from US$1,300 per ounce to US$1,388 per ounce which indicates the gold price rebound phenomenon driven by short-term market sentiment. Those gold producers who have excellent cost control capability and robust gross margins are believed to benefit first.
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