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Gold miner CNMC's Q3 profit falls 46% to US$0.96 million on poorer ore grades

MALAYSIAN gold miner CNMC Goldmine Holdings' third-quarter net profit fell by half to US$957,300, or 0.33 Singapore cent per share, as lower ore grades affected production and sales.

For the nine months ended Sept 30, net profit was down 86.5 per cent to US$1.5 million, or 0.52 Singapore cent per share.

Revenue in the third quarter nearly halved to US$4.7 million from US$8.5 million a year ago as sales of fine gold fell to 3,692 ounces from 6,285 ounces. Average realised gold price also declined to US$1,275 per ounce from US$1,345 per ounce.

As at Sept 30, 2017, the company had about US$20.15 million in cash and cash equivalents, compared to US$33.49 million from a year ago.

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All-in production costs in the third quarter rose to US$1,546 per ounce of gold from US$728 per ounce in Q3 FY16, mainly due to lower gold output and higher capital expenditure for the construction of the CIL plant. However, CNMC expects all-in cost of production to decline for the final quarter of 2017 with the bulk of capital expenditure on its carbon-in-leach (CIL) plant already spent in the third quarter.

The CILplant is in the process of conducting trial operations, which began on Nov 6, 2017. CNMC expects that the plant will enable extraction and processing of at least 500 tonnes of higher-grade ore daily at its flagship Sokor gold field in Kelantan upon completion of trial production, the company said.

Construction of the plant began in May 2017 and was funded using internal resources. It was completed within the budget of RM25 million (S$8.1 million) set by the company's board of directors.

At a results briefing on Friday, the company's management said that the company is exploring other industrial metals like iron ore as part of contingency plans.

Responding to the emergence of cryptocurrencies as a possible alternative store of value to rival gold, CNMC chief executive Chris Lim said at a results briefing on Friday that he believes "gold is here to stay".

He added that bitcoin has only surfaced in recent times while gold has a longer history of being a traditional safe haven asset.