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Unsettled hedging contracts hold back Zijin Mining's FY'16 profit

China's Zijin Mining Group Co. Ltd. improved its attributable net profit by 11.12% to 1.84 billion yuan in 2016 compared to the previous year.

The Hong Kong-listed miner said March 24 that net profit was comparatively moderate despite higher prices and production, mainly because unsettled 2015 hedging contracts were carried forward into the first half of 2016 to hedge the majority of annual production.

Operating income for the year rose 6.12% to 78.85 billion yuan.

While group gold production slipped 13.24% year over year to about 6.9 million ounces, mine-produced output climbed 14.5% to about 1.4 million ounces.

Group copper production jumped 35.44% in 2016 to 561,270 tonnes, zinc output was up 11.42% at 464,537 tonnes and lead production increased 49.11% to 35,944 tonnes compared to the previous year.

Zijin witnessed a 45.94% year-over-year increase in silver production, which totaled 588,689 kilograms, but iron concentrate production fell 68.02% to 630,000 tonnes.

As of March 24, US$1 was equivalent to 6.89 Chinese yuan.