China's largest gold producer, Zijin Mining (2899), said it will increase output to take advantage of record metal prices, adding it is in talks to buy an overseas gold mining project.

"The weaker US dollar made gold one of the most popular investments in 2007," chairman Chen Jinghe said in Hong Kong yesterday.

"The rising demand of gold has contributed a lot to Zijin's sales revenue. But at the same time, the [weak] US dollar also slightly offset the company's profits."

Zijin plans to produce 57.3 tonnes of gold this year, up 9.6 percent from last year's 52.3 tonnes.

The company earmarked 5 billion yuan (HK$5.47 billion) for mining capacity expansion and overseas acquisitions, up from capital spendings of 4 billion yuan last year.

Chen said the company would delay building and scale down spending on its Rio Blanco copper-molybdenum project in Peru, ensuring the project is more economical and environmentally friendly.

He said Zijin would open a zinc mine in Russia's Tuva Republic in the first half of the year. Its gold mining project in Mongolia would start production in the second half.

Zijin shares fell 3.67 percent to close at HK$9.71 yesterday.