Hong Kong, Feb 19, 2009 AEST (ABN Newswire) - The present article comes from the speech at the forum of 2008 China Mining Congress by Mr. Lu Xiaozhao, executive director and deputy general manager of Lingbao Gold Company Ltd. (HKG:3330)(PINK:LGBOF). The topic is the development and prospect of the gold industry in China, mainly divided into three parts.
I. Review on the world and China gold market in 2007 and 1h of 2008
In 2007 the annual world gold production was 2,480t while the gold demand confirmed was up to 3,547.3t, of which the demand for jewelry reached 2,426t; the demand for industry amounted to 465t, increasing 2% over the last year (the demand calculated in US dollars increased 17%); the demand for investment was 656.1t; ETF and the demand for the similar investment were 250.8t. The production of mineral gold was 2,447t with little change over the last year.
The year of 2007 is a year the economic expansion slowed down its pace. So the uncertainty of the world economy caused by the financial turbulence in the main countries became the most effective motivity for the rising of gold price. In the second half of 2007, the gold investment products represented by ETF was extremely hot. The capital of the financial market promoted the continuous rising of the gold price and enabled the gold price to hit the historical new high in the 1h of 2008.
In general, the gold demand was 1.415t in the first half of 2008, decreasing 18.85% over the same period of last year and showing an obvious slide-down. In addition, the dropping of the price of commodities and the strong rebound of US dollars have become main reasons for the dropping of gold price. The uncertainty of the global economy in the future also restricts the rising of gold price.
In China the annual gold production of 2007 is 270t of which the mineral gold is 236t. China became the second largest gold producing and consuming country. The gold production is 122t in the first half of 2008.
Gold futures was listed in SHFE in September last year. It symbolized the start of the construction of the gold futures forward contract market and the reform of gold investment in the financial field. Since 1 Dec. 2007, China has began to restrict exploration and mining activity on the precious metals (gold, silver, platinum) by foreign businessmen and abolished the relevant policies (limited to joint venture and cooperation policies) of encouraging the exploration and processing of the mines which are low-graded and hard to mining. All the above show again that China pays attention to gold as a strategic resource.
II. Tendency of China gold market and development of the industry
The future international geopolitical factors and turbulence of the international financial industry will continue to affect the trend of gold price. The prospect of the gold demand of the inland seems to be complicated. In spite of the drastical fluctuation of the gold price in 2008 the prospect is optimistic in general.
The potential gold demand of the developing countries is great. In the long run this may support the steady upward trend of the gold price. Facing the recent turbulence in the financial circle, the trend of the gold price could be described as "too much joys and griefs". So gold, as a product with the anti-risk function, will be the ideal investment product for more investors. Furthermore, as a scarcity precious metal, the anti-risk function of gold would be more obvious. Based on the reasons stated above, we're confident to the prospect of the gold market.
China National Development and Reform Commission has established encouraging policies for the gold industry and is believed to exert positive influences, such as improving the mining technology of enterprises, promoting the industry structure adjustment, enhancing the macro-guidance and macro-control on the gold industry, rectifying the order of mining activities and protecting the gold resources. China gold industry will continue the reorganization and integration of the good-quality resources. With the improvement of the gold exploration and smelting technology and the technology of processing the low-graded ores as well as the enhancement of production concentration, we expect that the gold production of China will have continuous growth.
With the highly concentration of the gold industry in the world, the mining enterprises of China are confronted with great challenges in this period that strong is always strong. One of them to become stronger is to open up the channel to the capital market. By the assistance of capital, the mining enterprises in China accelerate the paces of integration and centralization, upgrade the operating efficiency and resource utilization and promote the competitive ability in the international market. In the tide of integration and expansion of the mine companies, capital market utilization has become an inevitable choice for the mine industry development. Undoubtedly the time that emphasizing simultaneously on capital and resources, merge and reorganization of the mine industry has begun.
III. Strategies of Lingbao Gold facing the industry tendency
By the rising of the gold price in recent years and the anticipation of the gold price in the future, the international mining industry, especially the industry of precious metals taking gold as the main product, is undergoing continuous merging and integration. While the geopolitical factors, geological conditions and increase of mine cost are influencing the development of the gold mining industry in varying aspects. In China, the gold industry represented by the five leading companies, with their developing strategies and their own advantages, are undertaking competition and M&A on the limited mineral resources. During the process of M&A they meet lots of problems and difficulties never seen before.
Facing the developing trend and opportunities, Lingbao Gold keeps on its strategy as follows:
First of all, we will continue to focus on gold, seek and explore mineral resources of precious metals such as gold and the associated elements, continue to increase the reserves and resources in order to lay solid foundation for the sustainable development of the Company.
Secondly, we will continue to expand the mine production scale, adjust and upgrade the economic structure, promote the mine profit rate and the profitability of the whole company. Since 2005, Lingbao Gold has completed gold resources acquisition in Inner Mongolia, Gansu Province, Nanyang of Henan Province, Jiangxi Province and Kyrgyzstan in Mid-Asia, of which the mines in Inner Mongolia and Nanyang are productive ones, the mine in Kyrgyzstan is undertaking the exploration works and preparation for construction of the processing and smelting plant.
Thirdly, we are enhancing the cooperation with professional research institutions to promote the technology development and research works in the fields of mining, processing and smelting; intensify communication and cooperation with the mining companies home and abroad and attain mutual benefit and win-win for both.
Fourthly, we will continue to promote the management level, tap the potential and upgrade the technology, increase the output, lower the cost, maximize the benefit contribution and do best to keep interests for the Company and all shareholders.
Return to the shareholders and to the society
Lingbao Gold will, as always, insist on the long-term development strategy, make all the efforts to return to the shareholders and to the whole society.
Contact
IR Contact
Ms. Qi Haihua (Jasimon Qi)
Secretary to the Board of Directors
& Joint Company Secretary
Lingbao Gold Company Ltd.
Tel: +86-398-886-2200
Fax: +86-398-886-0166
E-mail: lingbaogold@vip.sina.com
Website: www.lbgold.com
Mr. Lawrence Poon
Joint Company Secretary
Lingbao Gold Company Ltd.
Tel: +852-2511-0288
Fax: +852-2511-0285
E-mail: lingbao.lawrence@gmail.com
Website: www.lbgold.com
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