Shandong Gold Mining Co. Ltd. said March 6 that net profit attributable to shareholders dropped 12% to 1.14 billion Chinese yuan in 2017, with operating revenues edging up 2% to 51.04 billion yuan.
The decline in net profit was due to lower production volumes at some of Shandong Gold's mines as the company carried out investigations and a facility-upgrade program to improve mine safety. The company said it also recorded higher financing costs in the period as it used bank loans to fund the US$960 million acquisition of a 50% stake in the Veladero gold mine in Argentina from Barrick Gold Corp.
EPS dropped 21% to 61 fen per share from the 77 fen per share recorded in 2016. Finance costs rose 54% to 500.0 million yuan while administration fees were flat at 2.20 billion yuan. The company declared cash dividends of 40 fen per 10 shares.
Total gold output went up 20% to 35.88 tonnes of gold in 2017 and output guidance for this year is 39.86 tonnes. Shandong Gold said it was on track to ramp up its annual production to 50 tonnes by 2020. The company said it expected profits to hit 1.95 billion yuan this year.
As of March 6, US$1 was equivalent to 6.31 Chinese yuan.
