The company's 2013 performance fell far short of agreed market expectations and our estimates. Although the company's revenue increased 24.2% year over year to 7.942.1 billion yuan, the company recorded a serious loss of 674.3 million yuan.

We expect gold prices to stay under pressure for a long time and continue to fall in 2014. As some central banks, especially the Federal Reserve, begin to withdraw from quantitative easing policies, we expect gold prices to be under pressure for a long time.

Due to the suspension of Kyrgyz gold mine production, the company's ore gold production is expected to remain around 3.1 tons in 2014. The Kyrgyz gold mine would have contributed most of the company's production growth, but production of the mine was suspended due to a number of adverse factors.

The target price was lowered to HK$1.25 to maintain the “reduced holdings” investment rating.