Today, Kingold Jewelry, a leading 24-karat gold jewelry manufacturer and designer in China, announced it has signed a Gold Leasing Framework Agreement with the Wuhan branch of Shanghai Pudong Development Bank Ltd. (SPD Bank).
The agreement establishes basic framework for Kingold to lease gold from SPD Bank under a credit line of RMB 200 million (approximately $32.1 million U.S.), with actual gold leases made pursuant to separate lease agreements specifying the weight, settlement price, lease term, and lease rate of gold leased.
Under this agreement, SPD Bank began leasing gold to Kingold in February, and Kingold has entered into two lease agreements for an aggregate 530 kilograms of gold with a market price of around RMB 176 million (approximately $28.3 million U.S.). With an initial term of around 12 months each, these two lease agreements provide for a lease rate of 6% p.a. Based on that 6% p.a. lease rate, as well as the actual weight of gold leased, the gold settlement price and the actual number of days the gold was leased, payments on the two gold leases will be due quarterly beginning this month.
Kingold plans to use this additional gold reserve access to further expand its market share in 24-karat gold jewelry and investment gold business and to further solidify its leadership in the gold-processing industry. Having seen a growing demand from both existing and new clients, as well as encountering challenges to increase its working capital capabilities to meet this demand, the company will receive additional financial strength from this new agreement with SPD Bank as it expands its production. Kingold is also currently working with SPD Bank on additional future cooperation.
“We are very pleased to have secured access to additional gold to further develop our gold jewelry and investment gold business, and are currently seeking similar agreements with financial institutions in China,” said Kingold Jewelry Chairman and CEO Zhihong Jia. “This framework arrangement with SPD Bank, which builds upon our earlier gold leasing agreement with China Construction Bank in January 2013, [has] in total provided Kingold with $69.1 million in new sources of gold to date to help accelerate our growth and achieve a greater balance in free cash flow. We are confident that we will be able to greatly enhance the processing capability in our 24K jewelry manufacturing and investment gold processing businesses. We will continuously seek innovative financing options with China’s leading banking partners to expand our business, further improve our market leading position and create value for our shareholders.”
Centrally Located in Wuhan City, China’s fourth largest city, Kingold Jewelry was founded in 2002 and is now one of China’s leading designers and manufacturers of 24-karat gold jewelry, ornaments, and investment-oriented products. Kingold sells directly to retailers as well as through major distributors across China and has received numerous industry awards. The company has belonged to the Shanghai Gold Exchange since 2003.
For more information, visit www.kingoldjewelry.com
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