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China Gold International Resources Corp Ltd
Symbol CGG
Shares Issued 396,413,753
Close 2014-03-25 C$ 2.92
Market Cap C$ 1,157,528,159
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China Gold earns $57.1-million (U.S.) in 2013

2014-03-25 18:14 ET - News Release

Mr. Bing Liu reports

CHINA GOLD INTERNATIONAL REPORTS YEAR-END 2013 RESULTS AND PROVIDES 2014 OUTLOOK

China Gold International Resources Corp. Ltd. has released its year-end 2013 results and provided its 2014 outlook.

2013 financial, production and operating highlights

  • Revenues decreased by 9 per cent, or $29.8-million (U.S.), from $332.4-million (U.S.) for the year ended Dec. 31, 2012, to $302.6-million (U.S.) for the year ended Dec. 31, 2013.
  • Revenues from the Chang Shan Hao (CSH) gold mine accounted for 59 per cent, or $178.1-million (U.S.) (2012: $223.8-million (U.S.)), of total revenue for the year. The decline in CSH's 2013 revenue was due to the substantial drop in gold prices and lower production levels.
  • Revenue from the Jiama copper-gold-polymetallic mine accounted for 41 per cent, or $124.5-million (U.S.) (2012: $108.6-million (U.S.)), of total revenue for the year. This revenue growth of $15.9-million (U.S.) was mainly attributed to increased production levels and improved recovery rates.
  • Cost of sales decreased by 3 per cent, or $6.8-million (U.S.), from $207.5-million (U.S.) for the year ended Dec. 31, 2012, to $200.7-million (U.S.) for the same period in 2013. The decrease in cost of sales is primarily attributable to the increase in recovery rates, in addition to operation optimization of the ore-processing facilities at both mines.
  • Mine operating earnings for the company decreased by 18 per cent, or $23-million (U.S.), from $124.9-million (U.S.) for the year ended Dec. 31, 2012, to $101.9-million (U.S.) for the year ended Dec. 31, 2013.
  • Net income of the company decreased by 22 per cent, or $16.4-million (U.S.) from $73.5-million (U.S.) for the year ended Dec. 31, 2012, to $57.1-million (U.S.) for the year ended Dec. 31, 2013.
  • Gold production from the CSH mine decreased by 5.8 per cent from 139,443 ounces in 2012 to 131,418 ounces in 2013. This decline is partially due to lower grades of ore mined and longer recovery periods caused by the growing height of the leaching heap.
  • The accumulative project-to-date gold recovery at CSH has been steadily increasing over the last few years, from 39 per cent in 2010, to 46 per cent in 2011, to 53 per cent in 2012 and to 54 per cent in 2013.
  • The total production cost of gold per ounce and the cash production cost of gold per ounce for the year ended Dec. 31, 2013, both decreased compared with the same period in 2012. The primary reason for this decline is lower waste-rock expenditures in 2013.

 
                            CSH MINE
                                                Year ended Dec. 31,
                                                  2013        2012
       
Total production cost (US$) of gold per ounce    $ 866       $ 928        
Cash production cost(1) (US$) of gold per ounce  $ 707       $ 825
        
1. Non-IFRS (international financial reporting standards) measure.                                                  

  • The company successfully completed a new, 30,000-tonne-per-day stand-alone crushing, heap-leaching and ADR (adsorption, desorption and refining) plant in addition to the existing 30,000-tonne-per-day facility. A new, 80-kilometre-long, government-built, 110-kilovolt power line was completed by the end of November, 2013. The CSH mine's processing capacity increased from 30,000 tonnes per day to 60,000 tonnes per day.
  • Copper production from the Jiama mine increased by 10 per cent from 25,820,417 pounds in 2012 to 28,323,626 pounds in 2013. This third full year of increasing production for the Jiama mine is mainly due to higher volumes of ore mined and improved recovery rates.
  • The cash production cost of copper per pound decreased during the current period due to higher recovery rates realized during the year. Total production cost of copper per pound also decreased during the current period due to a lower amortization of mining rights with an increased ore reserve base in the Jiama mine. The company is closely monitoring production costs at the Jiama mine and will continue to make efforts to reduce costs.

                          JIAMA MINE
                                                Year ended Dec. 31,
                                                  2013        2012
Total production cost(1) (US$) of copper
per pound                                       $ 3.55      $ 4.13
Total production cost(1) (US$) of copper
per pound after byproduct credits(3)            $ 2.30      $ 2.58
Cash production cost(2) (US$) per pound
of copper                                       $ 2.90      $ 3.04
Cash production cost(2)  (US$) of copper
per pound after byproduct credits(3)            $ 1.65      $ 1.49

1. Production costs include expenditures incurred at the mine sites 
   for the activities related to production, including mining, 
   processing, mine site general and administrative, royalties, and
   so on.
2. Non-IFRS measure.
3. Byproduct credit refers to the sales of gold and silver during 
   the corresponding period.

  • On Dec. 20, 2013, in accordance with the schedule, the phase 2 expansion National Instrument 43-101-compliant feasibility study for Jiama was successfully completed by the Changchun Gold Design Institute in conjunction with independent consulting firm Mining One and the company's management. The results showed that measured and indicated copper mineral resources increased to 1,486 million tonnes averaging 0.41 per cent copper from 1,053 million tonnes averaging 0.44 per cent Cu. Contained copper metal increased to 6.14 million tonnes from 4.64 million tonnes. The proved and probable copper mineral reserves increased to 441 million tonnes at a grade of 0.61 per cent Cu from 363 million tonnes at 0.77 per cent Cu. The feasibility study estimated that the project has a net present value (9 per cent) of $1.3-billion and is expected to generate nominal after-tax cash flow of $5.8-billion.
  • By the end of December, 2013, the Jiama mine completed its 2013 drilling program for a total of 3,434 metres in the existing Tongqianshan open pit. Drilling results will be available in the first half of 2014. The major goals are to further define the main high-grade orebody in the current open-pit mining area and to better understand the geological structure on controlling metallogenic regularity. Total exploration expenditures were approximately $4.32-million (U.S.).

Bing Liu, chief executive officer of the company, commented: "We are very pleased with the operational progress on both mines. Good production results were achieved for the sixth consecutive year at the CSH gold mine. The Jiama copper-polymetallic mine achieved its third full year of increasing production. We have seen significant cost reduction on both of our mines. We have delivered on our commitment to the shareholders and completed expansion construction at CSH ahead of the schedule. We finished Jiama's feasibility study on time. Last year presented many challenges to us, such as metal prices fluctuations. Those challenges are not uncommon in the mining industry. Our experienced management team and a solid portfolio of outstanding producing assets will help us withstand those challenges and deliver strong operational results to our shareholders."

2014 production and operating outlook:

  • Organic growth, cost management and international expansion continue to be the company's main goals for 2014.
  • The company will continue to leverage the technical and operating experience of the company's controlling shareholder, China National Gold Group Corp. (CNG), to improve operations at its mines, increase production and minimize costs.
  • To fulfill its growth strategy, the company is continually working with CNG and other interested parties to identify potential international mining opportunities, mainly outside of China, that can be readily and quickly brought into production, with the possibility of further expansion through continued exploration.
  • Full-year gold production for the company is expected to be approximately 208,000 ounces.
  • Full-year copper production for the company was previously expected to be about 50 million pounds. As announced in its news release on Feb. 27, 2014, the company is not able to provide definitive 2014 production guidance for the Jiama mine, as the mine is dealing with reduced power supply that has affected the central Tibet region during the winter months. The Tibet autonomous regional government and the central government of China are currently progressing a power supply development plan. The company has implemented counteractive measures to mitigate the effect of power shortages, and anticipates that the Jiama mine will be able to resume full production in April or May. The company will need to confirm its 2014 guidance for the Jiama mine in mid-2014.
  • At CSH, the ramp-up of production and test runs on the newly built 30,000-tonne-per-day crusher and ADR plant are in progress. The company expects the first gold output from the 30,000-tonne-per-day facility in the second quarter of 2014, and gold production is expected to reach about 260,000 ounces per year by 2015.
  • Jiama's production capacity will grow in two stages. At the completion of the first stage, scheduled for the second half of 2014, the new mill's capacity is expected to grow from 6,000 tonnes per day to 28,000 tonnes per day of ore. Second-stage construction of an additional 22,000 tonnes per day of capacity is expected to be completed by the second half of 2015. This expansion will grow Jiama's processing capacity nearly eight times from 6,000 tonnes per day in 2013 to 50,000 tonnes per day in 2015. By 2016, copper production is expected to reach 176 million pounds.

2013 annual results investor and media presentation

Management will hold its 2013 annual results investor and media presentation in Hong Kong on March 31, 2014, at 10 a.m. (Hong Kong time). Year-end 2013 results and performance will be discussed and a question-and-answer period will be held.

Analysts, investors and media are encouraged to visit the company's website for the details of this event.

For a detailed look at the financial statements and management's discussion and analysis for the year ended Dec. 31, 2013, please visit the company's website, the Hong Kong Stock Exchange website or SEDAR.

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