LOANS (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Short-term Debt

Short term loans consist of the following: 

	As of
	September 30, 2018			December 31, 2017
	(unaudited)
(a)   Loan payable to Aijian Trust	$	-		$	46,108,447
(b)   Loans payable to Evergrowing Bank - Qixia Branch		-			153,694,824
(c)   Loans payable to Evergrowing Bank - Yantai Huanshan Road Branch		72,798,218			153,233,739
(d)   Loans payable to Sichuan Trust - gross amount		-			230,542,236
Loans payable to Sichuan Trust - deferred financing cost		-			(2,239,292	)
(e)   Loans payable to China Aviation Capital - gross amount		-			44,571,499
Loans payable to China Aviation Capital - deferred financing cost		-			(457,926	)
(f)   Loans payable to Huarong Trust - gross amount		-			146,163,777
Loans payable to Huarong Trust - deferred financing cost		-			(1,324,677	)
(g)   Loans payable to China Construction Investment Trust - gross amount		436,741			46,108,447
Loans payable to China Construction Investment Trust - deferred financing cost		-			(167,796	)
(h)   Loans payable to Zheshang Jinhui Trust		80,078,040			84,532,153
(i)    Loans payable to Zhongjiang International Trust		58,238,574			61,477,929
Loans payable to Zhongjiang International Trust - deferred financing cost		(31,277	)		(141,614	)
(j)    Loan payable to China Aviation Trust - gross amount		45,134,895			-
Loan payable to China Aviation Trust - deferred financing cost		(215,164	)		-
(k)   Loans payable to National Trust - gross amount		50,958,753			-
Loan payable to National Trust - deferred financing cost		(76,942	)		-
(l)    Loans payable to Anxin Trust		283,913,050			-
(m)  Loans payable to China Construction Bank		30,284,058			-
Total short term loans	$	621,518,946		$	962,101,746

(a) Loan payable to Aijian Trust

The Company fully repaid loan to Aijian Trust upon maturity on May 4, 2018. The pledged gold and restricted deposit were released and returned upon the repayment. 

(b) Loans payable to Evergrowing Bank – Qixia Branch

The Company fully repaid loan to Evergrowing Bank – Qixia Branch upon maturity and the pledged gold was subsequent returned to the Company.

(c) Loans payable to Evergrowing Bank – Yantai Huanshan Road Branch

From February 24, 2016 to March 24, 2016, Wuhan Kingold signed ten Loan Agreements with the Yantai Huangshan Road Branch of Evergrowing Bank for loans of approximately $145.6 million (RMB 1 billion) in aggregate. The purpose of the loans was for purchasing gold. The terms of loans are two years and bear fixed interest of 4.75% per year. Based on the loan repayment plan as specified in the loan agreements, $145,596 (RMB 1 million) was repaid in August 2016, $145,596 (RMB 1 million) was repaid on February 23, 2017 and another $145,596 (RMB 1 million) was repaid in August 23, 2017. The Company repaid $72.4 million (RMB 497 million) to Evergrowing bank Yantai Huangshan Road Branch upon maturity.

For the remaining balance of $72.8 million (RMB 500 million), the Company entered into a loan extension agreement with the bank to extend the loan borrowing period for additional seven months until October 2018, with the new interest rate of 6.5% per year. The loans are secured by 2,735 kilograms of Au9999 gold in aggregate with carrying value of approximately $92.6 million (RMB 635.9 million) and are guaranteed by the CEO and Chairman of the Company. Upon the maturity of these loans, the Company entered into a series of supplemental agreements with Yantai Huanshan Road Branch of Evergrowing Bank to extend the term of the loan for additional 12 months.

(d) Loans payable to Sichuan Trust

On September 7, 2016, the Company entered into two trust loan agreements with the Sichuan Trust Ltd. (“Sichuan Trust”) to borrow a maximum of approximately $291.2 million (RMB 2 billion) as working capital loan. The required annual interest rate is 8.46%. The Company paid the first interest payment equal to 1.21% of the principle received as loan origination fee on annual basis, then the rest of interest payments are calculated based on a fixed interest rate of 7.25%. The Company pledged 7,258 kilograms of Au9999 gold with carrying value of approximately $245.7 million (RMB 1.7 billion) as collateral to secure this loan. The loan is guaranteed by the CEO and Chairman of the Company. The Company also made a restricted deposit of approximately $2.2 million (RMB 15 million) to secure these loans. The deposit will be refunded when the loan is repaid upon maturity. As of September 30, 2018, the Company received an aggregate of approximately $218.4 million (RMB 1.5 billion) from the loan.

These loans originally have maturity dates between September 20, 2018 and November 30, 2018. During the three months ended September 30, 2018, these loans were extended to have maturity dates between November 20, 2019 and January 30, 2020. Therefore, these loans were recorded as long term. The required annual interest rate changed to from 8.46% to 8.1%.

The Company paid approximately $5.3 million (RMB 36.3 million) as loan origination fee in 2017 and 2016 for obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.6 million (RMB 4.4 million) and $2.1 million (RMB 13.4 million) deferred financing cost was amortized, respectively. For three months and nine months ended September 30, 2017, approximately $0.4 million (RMB 2.3 million) and $1 million (RMB 6.8 million) deferred financing cost was amortized, respectively.

(e) Loans payable to China Aviation Capital

On September 7, 2016, the Company entered into a trust loan agreement with China Aviation Capital Investment Management (Shenzhen) (“China Aviation Capital”) to borrow a maximum of approximately $87.4 million (RMB 600 million) as working capital loan. The first installment of the loan was approximately $42.2 million (RMB 290 million) to mature on September 6, 2018. The Company is required to make interest payments calculated based on a fixed annual interest rate of 7.5% and a one-time consulting fee of 3% based on the principal amount received as loan origination fee. The Company pledged 1,473 kilograms of Au9999 gold with carrying value of approximately $49.9 million (RMB 342.5 million) as collateral to secure this loan. The loan is guaranteed by the CEO and Chairman of the Company. The loan was extended upon maturity for another 18 months with a new maturity date of March 5, 2020. Therefore, the $42.2 million loan from China Aviation Capital was recorded as long term at September 30, 2018. The Company is required to pay interest based on a fixed annual interest rate of 10% and a one-time consulting fee of 3% based on the principal amount extended as loan origination fee.

The Company paid totally approximately $1.3 million (RMB 8.7 million) as loan origination fee for obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.1 million (RMB 0.8 million) and $0.5 million (RMB 3.0 million) deferred financing cost was amortized, respectively. For the three and nine months ended September 30, 2017, approximately $0.2 million (RMB 1.1 million) and $0.5 million (RMB 3.3 million) deferred financing cost was amortized, respectively.

(f) Loans payable to Huarong Trust

The Company fully repaid loan to Huarong International Trust Co. Ltd. (“Huarong Trust”) upon maturity on August 15, 2018. The pledged gold and restricted deposit were released and returned upon the repayment. 

The Company paid approximately $2.1 million (RMB 14.3 million) as loan origination fee for obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.2 million (RMB 1.5 million) and $1.3 million (RMB 8.6 million) deferred financing cost was amortized, respectively. For the three and nine months ended September 30, 2017, approximately $0.3 million (RMB 2 million) deferred financing cost was amortized.

(g) Loans payable to China Construction Investment Trust

On August 29, 2016, the Company entered into a trust loan agreement with China Construction Investment Trust to borrow a maximum of approximately $43.7 million (RMB 300 million) as working capital loan for the purpose of purchasing of gold solely with a period of 24 months from October 9, 2016 to October 9, 2018. For the loan obtained the Company is required to make interest payments are calculated based on a fixed annual interest rate. The interest payment is divided into two parts: (1) 1% of the principal amount received need to be paid before December 25, 2016 as loan origination fee; (2) the rest of interest payments are calculated based on a fixed interest rate of 7.5% and due on quarterly basis. The Company pledged 1,447 kilograms of Au9999 gold with carrying value of approximately $49.0 million (RMB 336.4 million) as collateral to secure this loan. The loan is guaranteed by the CEO and Chairman of the Company. The Company also made a restricted deposit of approximately $0.5 million (RMB 3 million) to secure the loan. During the three months ended September 30, 2018, the Company repaid approximately $43.2 million (RMB 297 million), with an outstanding balance of approximately $0.5 million (RMB 3 million).

The Company paid approximately $0.4 million (RMB 3 million) as loan origination fee for obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.1 million (RMB 0.3 million) and $0.2 million (RMB 1.1 million) deferred financing cost was amortized, respectively. For the three months and nine months ended September 30, 2017, approximately $0.04 million (RMB 0.3 million) and $0.2 million (RMB 1.0 million) deferred financing cost was amortized, respectively.

(h) Loans payable to Zheshang Jinhui Trust

On November 7, 2016, the Company entered into a trust loan agreement with Zheshang Jinhui Trust to borrow a maximum of approximately $80.1 million (RMB 550 million) for purchasing gold with a period of 24 months from principle receiving date November 15, 2018. The Company is required to make interest payments calculated based on a fixed annual interest rate of 7.8%. The Company pledged 2,708 kilograms of Au9999 gold with carrying value of approximately $91.7 million (RMB 629.6 million) as collateral to secure this loan. The loan is guaranteed by the CEO and Chairman of the Company. The Company also made a restricted deposit of approximately $0.8 million (RMB 5.5 million) to secure these loans. The deposit will be refunded when the loan is repaid upon maturity.

(i) Loans payable to Zhongjiang International Trust

On December 23, 2016, the Company entered into a trust loan agreement with Zhongjiang International Trust to borrow a maximum of approximately $58.2 million (RMB 400 million) for purchasing gold with a period of 24 months from December 23, 2016 to December 22, 2018. The Company is required to make interest payments calculated based on a fixed annual interest rate of 8.75%. The Company pledged 2,104 kilograms of Au9999 gold with carrying value of approximately $71.2 million (RMB 489.2 million) as collateral to secure this loan. The loan is guaranteed by the CEO and Chairman of the Company.

The Company paid approximately $0.3 million (RMB 1.9 million) as loan origination fee for obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.03 million (RMB 0.2 million) and $0.1 million (RMB 0.7 million) deferred financing cost was amortized, respectively. For the three and nine months ended September 30, 2017, approximately $0.04 million (RMB 0.2 million) and $0.1 million (RMB 0.7 million) deferred financing cost was amortized, respectively.

(j) Loans payable to China Aviation Trust

On January 25, 2017, Wuhan Kingold entered into a trust loan agreement with China Aviation Trust Ltd. to borrow a maximum of approximately $45.1 million (RMB 310 million) for working capital with a period of 24 months from the date of releasing the loan. The Company is required to make interest payments that are calculated based on a fixed annual interest rate of 8%. The Company pledged 1,647 kilograms of Au9999 gold with carrying value of approximately $55.1 million (RMB 378.4 million) as collateral to secure this loan. The loan is guaranteed by the CEO and Chairman of the Company. The Company also made a restricted deposit of approximately $0.5 million (RMB 3.1 million) to secure these loans. The deposit will be refunded when the loan is repaid upon maturity.

The Company paid approximately $1.4 million (RMB 9.3 million) as loan origination fee for obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.2 million (RMB 1.2 million) and $0.5 million (RMB 3.5 million) deferred financing cost was amortized, respectively. For three and nine months ended September 30, 2017, approximately $0.2 million (RMB 1.2 million) and $0.5 million (RMB 3.2 million) deferred financing cost was amortized, respectively.

(k) Loans payable to National Trust

On February 28, 2017, Wuhan Kingold entered into a trust loan agreement with National Trust Ltd. (“National Trust”) to borrow a maximum of approximately $50.9 million (RMB 350 million) for working capital with a period of 24 months from the date of releasing the loan. The Company is required to make interest payments that are calculated based on a fixed annual interest rate of 8.617%. The Company pledged 1,745 kilograms of Au9999 gold with carrying value of approximately $59.4 million (RMB 408.1 million) as collateral to secure this loan. The loan is guaranteed by the CEO and Chairman of the Company.

The Company paid approximately $0.4 million (RMB 2.6 million) as loan origination fee for obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.05 million (RMB 0.3 million) and $0.1 million (RMB 0.9 million) deferred financing cost was amortized, respectively. For the three and nine months ended September 30, 2017, approximately $0.05 million (RMB 0.3 million) and $0.1 million (RMB 0.7 million) deferred financing cost was amortized, respectively.

(l) Loans payable to Anxin Trust Co., Ltd

In January 2016, Wuhan Kingold signed a Collective Trust Loan Agreement with Anxin Trust Co., Ltd. (“Anxin Trust”). The agreement allowed the Company to access of approximately $436.8 million (RMB 3 billion) within 60 months. Each individual loan will bear a fixed annual interest of 14.8% or 11% with various maturity dates from February 19, 2019 to October 12, 2019. The purpose of this trust loan was to provide working capital for the Company to purchase gold. The loan is secured by 15,450 kilograms of Au9999 gold in aggregate with carrying value of approximately $523.0 million (RMB 3.6 billion). The loan is also guaranteed by the CEO and Chairman of the Company. As of September 30, 2018, the Company received full amount from the loan. During the nine months ended September 30, 2018, the Company repaid approximately $80.1 million (RMB 550 million). The Company also made a restricted deposit of approximately $3.5 million (RMB 24 million) to secure the rest of these loans. The deposit will be refunded when the loan is repaid upon maturity.

(m) Loan payable to China Construction Bank

In September 2018, Wuhan Kingold signed a Loan Agreements with Wuhan JiangAn Branch of China Construction for a loan of approximately $17.2 million (RMB 118 million). The purpose of this loan is to provide working capital for the Company to purchase gold. The term of the loan is one year with maturity date of September 19, 2019 and bears fixed interest of 4.35% per year. As of September 30, 2018, the Company received full amount from the loan.

In September 2018, Wuhan Kingold signed a second Loan Agreements with Wuhan JiangAn Branch of China Construction for a loan of approximately $25.0 million (RMB 172 million). The purpose of this loan is to provide working capital for the Company to purchase gold. The term of the loan is one year with maturity date of September 25, 2019 and bears fixed interest of 4.35% per year. As of September 30, 2018, the Company received approximately $13.1 million (RMB 90 million) from the loan.

The above mentioned two loans were guaranteed by the CEO and Chairman of the Company. In addition, related party Wuhan Huayuan pledged fixed asset buildings as collateral to further secure these loans. The loan agreements also required that Company to maintain an asset-liability ratio less than 90% and current ratio over 1. The Company is not allowed to increase contingent liabilities without notice to the bank, the balance of contingent liabilities should be no larger than RMB 3.05 billion, contingent asset-liability ratio should be less than 60%.

Interest expense for all of the loans mentioned above amounted to $21.3 million and $62.8 million for the three and nine months ended September 30, 2018, respectively. Interest expense for short-term loan for the three and nine months ended September 30, 2017 was $9.7 million and $29.7 million, respectively.

The weighted average interest rate for the short term loans for the nine months ended September 30, 2018 and 2017 was 8.9% and 6.5%, respectively.

Schedule of Long-term Debt Instruments

Long-term loans consist of the following:

	As of
	September 30, 2018			December 31, 2017
	(unaudited)
(n)   Loans payable to Minsheng Trust - gross amount	$	218,394,654		$	-
Loans payable to Minsheng Trust - deferred financing cost		(2,370,401	)		-
(o)  Loans payable to Anxin Trust		72,798,218			461,084,471
(p)  Loans payable to Chang’An Trust - gross amount		142,691,690			153,694,824
Loans payable to Chang’An Trust - deferred financing cost		(880,604	)		(1,563,230	)
(q)   Loans payable to China Aviation Trust - gross amount		-			47,645,395
Loans payable to China Aviation Trust - deferred financing cost		-			(761,674	)
(r)   Loans payable to China Aviation Capital		42,222,966			-
(s)   Loans payable to National Trust - gross amount		-			53,793,188
Loans payable to National Trust - deferred financing cost		-			(228,068	)
(t)   Loans payable to Zheshang Jinhui Trust (new) - gross amount		91,929,590			76,847,412
Loans payable to Zheshang Jinhui Trust (new) - deferred financing cost		(448,242	)		(1,102,181	)
(u)   Loans payable to Sichuan Trust - gross amount		218,394,654			-
Loans payable to Sichuan Trust - deferred financing cost		(171,345	)		-
(v)   Loan payable to Dongguan Trust		145,596,435			-
Loan payable to Dongguan Trust - deferred financing cost		(1,983,348	)		-
Total long term loans, net of deferred financing costs	$	926,174,267		$	789,410,137

(n) Loan payable to Minsheng Trust

On December 26, 2017, the Company entered into a Trust Loan Contract in the amount of no more than approximately $218.4 million (RMB 1.5 billion) with China Minsheng Trust Co., Ltd. (“Minsheng Trust”). The purpose of the trust loan is to supplement liquidity needs. The Trust Loan will be issued in installments. Each installment of the Trust Loan has a 24-month term, and the period from issuance date of the first installment to the expiration date of the last installment shall not exceed 30 months. The Trust Loan bears interest at a fixed annual rate of 9.2%. The loan is secured by 7,887 kilograms of Au9999 gold in aggregate with carrying value of approximately $270.6 million (RMB 1.9 billion). The loan is also guaranteed by the CEO and Chairman of the Company. The Company made a restricted deposit of approximately $2.2 million (RMB 15 million) to secure these loans. The deposit will be refunded when the loan is repaid upon maturity. As of September 30, 2018, the Company received an aggregate of approximately $218.4 million (RMB 1.5 billion) from the loan.

The Company paid approximately $3.8 million (RMB 25.9 million) as loan origination fee for obtaining the new loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $1.5 million (RMB 9.6 million) deferred financing cost was amortized.

(o) Loans payable to Anxin Trust (see Note 5 (l) above)

(p) Loans payable to Chang’An Trust

In September 2017, Wuhan Kingold entered into a new Trust Loan Contract with Chang’An Trust. The agreement allows the Company to access a total of approximately $145.6 million (RMB 1 billion) for the purpose of working capital needs. The loan bears a fixed annual interest of 10% with a term of 24 months and is secured by 4,784 kilograms of Au9999 gold in aggregate with carrying value of approximately $163.6 million (RMB 1.1 billion). The loan is also guaranteed by the CEO and Chairman of the Company. As of September 30, 2018, the Company received full amount from the loan. The Company also made a restricted deposit of approximately $1.5 million (RMB 10 million) to secure these loans. The deposit will be refunded when the loan is repaid upon maturity. On September 30, 2018, the Company made repayment of approximately $2.9 million (RMB 20 million). Subsequently on October 31, 2018, the Company made repayment of approximately $25.9 million (RMB 178.2 million) to Chang'An Trust.

The Company paid approximately $1.5 million (RMB 11 million) as loan origination fee for obtaining the new loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.2 million (RMB 1.4 million) and $0.6 million (RMB 4.1 million) deferred financing cost was amortized, respectively.   

(q) Loans payable to China Aviation Trust (see Note 5 (j) above)

(r) Loans payable to China Aviation Capital (see Note 5 (e) above)

(s) Loans payable to National Trust (see Note 5 (k) above)

(t) Loans payable to Zheshang Jinhui Trust (new)  

In November 2017, Wuhan Kingold entered into a new Trust Loan Contract with Zheshang Jinhui Trust. The agreement allows the Company to access a total of approximately $145.6 million (RMB 1 billion) for the purpose of working capital needs. The loan bears a fixed annual interest of 7.7% with a term of 24 months and is secured by 3,264 kilograms of Au9999 gold in aggregate with carrying value of approximately $110.4 million (RMB 758.5 million). The loan is also guaranteed by the CEO and Chairman of the Company. As of September 30, 2018, the Company received an aggregate of approximately $91.9 million (RMB 631.4 million) from the loan. The Company also made a restricted deposit of approximately $0.92 million (RMB 6.3 million) to secure these loans. The deposit will be refunded when the loan is repaid upon maturity.

The Company paid approximately $1.4 million (RMB 9.5 million) as loan origination fee for obtaining the new loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.3 million (RMB 1.9 million) and $0.9 million (RMB 5.6 million) deferred financing cost was amortized, respectively.

(u) Loans payable to Sichuan Trust (see Note 5 (d) above)

(v) Loans payable to Dongguan Trust

In July 2018, Wuhan Kingold entered into a gold income rights transfer and repurchase agreement (the “Agreement”) with Dongguan Trust. The Agreement allows the Company to obtain no more than approximately $145.6 million (RMB 1 billion) to exchange the income earning rights of the Company. The Company committed to buy back the rights and repay the proceeds received, and shall pay a fixed interest of 11% over a term of 18 months. The Company determined that this Agreement is essentially a loan agreement due to the nature of this transaction. This loan is secured by 4,974 kilograms of Au9999 gold in aggregate with carrying value of approximately $166.0 million (RMB 1,140.2 million). The loan is also guaranteed by the CEO and Chairman of the Company. The Company also made a restricted deposit of approximately $1.5 million (RMB 10 million) to secure the loan. The deposit will be refunded when the loan is repaid upon maturity.

The Company paid approximately $2.2 million (RMB 15 million) as loan origination fee for obtaining this loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the three and nine months ended September 30, 2018, approximately $0.2 million (RMB 1.4 million) deferred financing cost was amortized.

Total interest expense for the above long-term loans was approximately $15.3 million and $53.0 million for the three and nine months ended September 30, 2018, respectively. Total interest expense for the above long-term loans was approximately $17.4 million and $66.2 million for the three and nine months ended September 30, 2017, respectively.

The weighted average interest rate for the long-term loans for the nine months ended September 30,2018 and 2017 was 8.9% and 9.8%, respectively.