WUHAN(BullionStreet): Kingold Jewelry, Inc. (NASDAQ: KGJI), one of China's leading manufacturers and designers of high quality 24-karat gold jewelry, ornaments and investment-oriented products, has announced that it signed a Gold Leasing Framework Agreement with the Wuhan branch of Shanghai Pudong Development Bank Ltd. (SPD Bank).
SPD Bank is a publicly-traded (Shanghai Stock Exchange) commercial bank founded in 1992.
The new Agreement establishes the basic framework for Kingold to lease gold from SPD Bank under a total credit line of RMB 200 million (approximately US$32.1), with actual gold leases under the Agreement made pursuant to separate lease agreements that specify the weight of gold leased, the settlement price (yuan/gram), the lease term and the lease rate.
SPD Bank began leasing gold to Kingold under the Agreement in February, and Kingold has entered into two lease agreements under the Agreement for an aggregate 530 kilograms of gold having a market price of approximately RMB176 million (approximately US$28.3 million). These two lease agreements have an initial term of approximately 12 months each, and provide for a lease rate of 6% p.a. Payments on these two gold leases will be due quarterly beginning in March 2013 and are based on the 6% p.a. lease rate, the actual weight of gold leased (in grams), the gold settlement price (yuan/gram), and the actual number of days the gold was leased.
Kingold anticipates utilizing this access to additional gold reserves to further expand market share in its 24k gold jewelry and investment gold business and to further solidify its leading role in the gold-processing industry.
The company has seen increasing demand from existing and new clients, and encountered challenges to increase its working capital capabilities to meet this demand.
The new Agreement with SPD Bank will provide additional financial strength as it expands production, and the company is currently working with SPD Bank on further cooperation in the future.
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