Shandong Gold Mining Co shares tumbled yesterday in Shanghai as sparkling interim profits failed to offset falling prices of the precious metal.

Analysts said investors shouldn't panic and sell their shares because the gold miner has strong growth potential in 2009 and 2010. They're recommending "add" or "buy."

Shares in China's third-biggest bullion producer fell 4.84 percent to 35.39 yuan (US$5.18) in Shanghai yesterday, while the benchmark Shanghai Composite Index inched up 0.34 percent to 2,413.37.

Shandong Gold said on Sunday that first-half net income rose to 495.5 million yuan, or 1.50 yuan a share, from 92.6 million yuan, or 0.58 yuan a share, a year ago.

"Shandong has lost investment value as a result of the double blows of diving gold prices and the slide of the broad market," said Huang Yong, a GF Securities Co analyst. "But investors are not advised to begin panic selling."

Gold prices have eased recently with the strong recovery of the US dollar. Bullion ended at 181 yuan a gram on the Shanghai Gold Exchange yesterday.

Huang said the greenback's strong performance may not last.

That view is backed by Ge Jun, a Changjiang Securities Co analyst.

"The hard currency's recovery is a short-term move, and it is expected to lose steam in future trading, though depreciation may be limited," Ge said.

"Gold prices still have strong support for the next two years," the analyst added.

(Shanghai Daily August 26, 2008)