Sino Says Bullion May Reach $1,000 by Year's End

By Rebecca Keenan

Aug. 5 (Bloomberg) -- Sino Gold Mining Ltd., owner of China's second-largest bullion mine, said the metal may reach $1,000 an ounce by the end of the year because of supply constraints.

``That's why we closed out our hedges,'' Chief Executive Officer Jake Klein told reporters at Kalgoorlie, Western Australia. The Sydney-based company sold A$204 million ($189 million) in shares last quarter to close its forward sales contracts to take advantage of rising bullion prices. ``I'd be very surprised if you didn't see $1,000 by the end of the year.''

Klein plans to add four mines in China to boost total annual output to more than half a million ounces. Gold prices jumped 33 percent in the past year as investors sought an inflation hedge and protection from declining equities and a falling dollar.

``It is the normal inflation, capital market volatility and geopolitical instability'' that's also helping gold rise, he said. New mines weren't starting up fast enough to meet demand, and gold may eventually reach $1,200 an ounce, he said, without giving a timeframe.

Sino Gold fell as much as 40 cents, or 8 percent, to A$4.60 and was at A$4.67 at 1:51 p.m. Sydney time on the Australian stock exchange. The company produced 35,412 ounces in the three months ended June 30, from 9,840 ounces a year earlier.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net