Sino Gold aims to cut costs, double gold production

Author: Joseph Chaney and James Regan

* Aims to double gold production by 2012

* To reduce production costs to $300 per ounce by 2012

(Adds details, quotes, changes dateline)

KALGOORLIE, Australia, Aug 3 (Reuters) - Sino Gold (SGX.AX)(1862.HK), which operates China's second-largest gold mine, on Monday said it aims to double gold production by 2012 to more than 400,000 ounces, and will reduce costs to $300 per ounce.

As of the end of 2008, each ounce of gold cost the company roughly $400 per ounce, Sino Gold chief operating officer Cobb Johnstone said at the Diggers and Dealers mining conference.

In december, Australia and Hong Kong-listed Sino Gold forecast combined 2009 gold production from its Jinfeng mine and White Mountain lode under development of between 210,000 and 230,000 ounces, up from 2008's tally of 150,000 tonnes from Jinfeng.

Jinfeng, in China's Guizhou Province, is second in size only to the Zijinshan deposit in Fujian province.

Gold XAU= prices were steady above $950 per ounce in Europe on Monday as the weaker dollar underpinned the previous session's gains, but the rise was limited by a dearth of demand for the metal from jewellers and exchange-traded funds.

"I see it going over $1,000, but not much over that over the next twelve months," Johnstone said, adding that in the long term, Sino Gold may look beyond the precious metal.

"I dare say there will come a time when we will start to look at diversifying out of China or out of gold," Johnstone said.

Gold prices have withstood much of the routing in metals markets this year, rising more than 10 percent since January, thanks to an image as a safe-harbour investment.

Newcrest Mining Ltd (NCM.AX), Australia's biggest gold miner also planned to lift its gold production -- by at least 40 percent over the next five years -- executive general manager of operations Geoff Day said on Monday.

"That excludes a number of additional opportunities we have that could lead to an even bigger increase and is based solely on mines already up and running," Day told Reuters on the sidelines of the conference in Western Australia.

(Editing by CHris Lewis)