Gold production falls at Chinese mine
The owner of China's second largest gold mine has announced that it has cut its forecasts for gold production.
This could be good for gold investors as, although China is the world's largest producer of gold, the drop is in line with a worldwide downturn in output. However, demand continues to increase and this could push up gold prices.
Sino Gold Mining, an Australian-based company which operates the Jinfeng project, said that the mine is now expected to produce between 150,000 and 160,000 ounces from now until the end of 2008, compared to the 170,000 to 190,000 ounces previously forecasted.
It also said that the operating costs are expected to go up 23 per cent to $370 an ounce.
The decline has been blamed on power cuts and the gold mined being lower quality than was expected.
Hunter Hillcoat of Austock Securities in Sydney told Bloomberg that the announcement came as a shock to the gold industry and that stock prices have fallen as a result.
"When a company moves into production it goes under the microscope on deliverability. The market is taking a severe reaction to the news," he said.
China became the world's largest producer of gold when it overtook South Africa in 2007.
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