(All figures are in U.S. dollars)
BEIJING, May 15 /Xinhua-PRNewswire-FirstCall/ -- China Shen Zhou Mining
& Resources, Inc. (American Stock Exchange: SHZ) (''China Shen Zhou'', or
''the Company''), a leading company engaged in the exploration,
development, mining and processing of fluorite, zinc, lead, copper, and
other nonferrous metals in China, today announced its financial results for
the first quarter of 2008 ended March 31, 2008.
First Quarter 2008 Financial Results
Net revenue for the first quarter of 2008 was $744,000, compared with
$3.0 million in the same period of 2007. The decline was primarily because
of: 1) the shortage of zinc ores as raw materials for the Company's Inner
Mongolia-based subsidiary, Qianzhen Mining ("Qianzhen"); 2) the unexpected
situation in the Company's Inner Mongolia-based fluorite subsidiary,
Xiangzhen Mining (''Xiangzhen''), related to the quality of water used for
individual consumption as well as for production. During the trial
operation of Xiangzhen's newly completed fluorite processing plant, it was
discovered the locally drilled well yielded water which contained a high
level of heavy metals, unsuitable for individual consumption and the
fluorite-processing process. As a result, the production of fluorite powder
declined during the first quarter of 2008. Xiangzhen is located in an
isolated area and has to rely on locally drilled wells to generate water
for individual and industrial uses.
''The continuation of the supply issue at Qianzhen and the emergency
water situation at Xiangzhen brought challenges to the Company,'' said Ms.
Jessica Yu, Chairwoman and CEO of China Shen Zhou. ''And traditionally our
first quarter is a slow production and sales period because of the Chinese
New Year. To address the nonferrous metals supply issue at Qianzhen, we
have started to produce refined sulfur concentrates from the current
facilities and we expect to take advantage of the high prices enjoyed by
such products. The source of sulfur is local and the production does not
require retooling of the existing machinery. To address the water
situation, we have already found a new location nearby for a well which is
believed to contain useable water. We expect a new water supply system to
be up and running sometime in the second quarter of 2008 to make sure our
fluorite processing plant is back in normal production. In the meantime, we
have started using a smaller-scale fluorite processing plant which we used
to produce fluorite powder before the completion of the new plant. We
expect that the old plant will replace some of the lost fluorite revenues
in the second quarter.''
Ms. Yu continued, ''Our new 200,000-ton-capacity nonferrous plant in
Xinjiang has so far successfully produced high-grade zinc and copper
concentrates during its own trial operation. At the same time, we are
conducting in-depth exploration to find more high-grade metal ores. Initial
results indicate zinc, copper, lead, gold and silver. We are confident to
find more prospecting areas to enlarge our mineral resources to supply our
Xinjiang plant. Lastly, our copper-gold project in Kyrgyzstan has been
attracting interest from the Chinese authorities in potential collaboration
in research and financing. We believe our pre-development process in the
copper-gold mine in Kyrgyzstan could be accelerated with government
support.''
Gross profit during the first quarter of 2008 was $192,000, compared
with $1.8 million in the same period of 2007. Gross margin was 25.8%,
compared with 59.9% in the same period of 2007, mainly because of the
decline in net revenue as described above.
Selling and marketing expenses were $18,000, compared with $46,000 in
the same period of 2007. General and administrative expenses were $2.0
million, versus $1.2 million in the same period of 2007. The increase in
general and administrative expenses was primarily because of the
amortization of exploration rights at the Company's Xinjiang-based
nonferrous metals division, Xingzhen Mining, and the newly acquired
copper-gold mine in Kyrgyzstan.
Total interest expenses were $1.9 million, compared with $1.6 million
in the same period in 2007. Total non-cash interest expenses were $1.8
million. The interest expenses were mainly due to the six-year convertible
bonds issued to Citadel Equity Fund, Ltd. (''Citadel'') in December 2006.
The Company incurred a net loss of $3.4 million, compared with a net
loss of $1.1 million in the same period of 2007. Diluted net loss per share
was $0.15, versus diluted net loss per share of $0.05 in the same period of
2007.
As of March 31, 2008, the Company's total cash and cash equivalents
were $1.4 million, compared to $2.9 million at December 31, 2007. Total
shareholders' equity decreased to $25.5 million as of March 31, 2008 from
$27.9 million at December 31, 2007.
Update on Xinjiang-based Nonferrous Metal Plant
On April 24, 2008, the Company announced the completion of its
construction of a new nonferrous metal concentrator in northern Xinjiang
Uyghur Autonomous Region. The all-new, 200,000-ton-capacity nonferrous
metal plant will process copper, zinc and lead ores and produce non-ferrous
concentrates. To date, qualified copper and zinc concentrates have been
successfully produced and supplied to new clients.
The facility is located in Buerjiin County in northern Xinjiang, about
3 miles from the Company's Keyinbulake nonferrous-metal mine, which has a
government mining license valid until August 2013. The Keyinbulake deposit
is situated in one of the most geologically rich regions of Xinjiang.
Xingzhen Mining is enhancing in-depth exploration activities in the
region and aiming to increase the mineral resources available for the new
Xingzhen plant.
About China Shen Zhou Mining & Resources, Inc.
China Shen Zhou Mining & Resources, Inc., through its subsidiary,
American Federal Mining Group ("AFMG"), is engaged in the exploration,
development, mining, and processing of fluorite and nonferrous metals such
as zinc, lead and copper in China. The Company has the following principal
areas of interest in China: (a) fluorite exploration and extraction in the
Sumochaganaobao region of Inner Mongolia; (b) zinc/copper/lead exploration,
mining and processing in Wulatehouqi of Inner Mongolia; and (c) zinc/copper
exploration, mining and processing in Xinjiang. In addition, AFMG owns 100%
of Kichi-Chaarat Closed Joint Stock Company, whose major assets include a
copper-gold mine located in the Kuru-Tegerek region of western Kyrgyzstan.
For more information, please visit http://www.chinaszmg.com/
Safe Harbor Statement
Certain of the statements made in the press release constitute forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements can be identified by the use of
forward- looking terminology such as "believe," "expect," "may," "will,"
"should," "project," "plan," "seek," "intend," or "anticipate" or the
negative thereof or comparable terminology. Such statements typically
involve risks and uncertainties and may include financial projections or
information regarding our future plans, objectives or performance. Actual
results could differ materially from the expectations reflected in such
forward-looking statements as a result of a variety of factors, including
the risks associated with the effect of changing economic conditions in The
People's Republic of China, variations in cash flow, fluctuation in mineral
prices, risks associated with exploration and mining operations, and the
potential of securing additional mineral resources, and other risk factors
detailed in reports filed with the Securities and Exchange Commission from
time to time.
For more information, please contact:
In China:
Sterling Song
Senior Investor Relations Manager
China Shen Zhou Mining & Resources, Inc.
Tel: +86-10-6887-2811
Email: investor@chinaszky.com
Web: http://www.chinaszmg.com
In the U.S.:
Valentine Ding
Investor Relations
Grayling Global
Tel: +1-646-284-9412
Email: vding@hfgcg.com
Financial Tables to Follow
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
March 31, December 31,
2008 2007
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $ 1,365 $ 2,949
Accounts receivable, net 1,811 2,481
Other deposits and prepayments, net 1,008 1,254
Inventories 2,153 1,639
Total current assets 6,337 8,323
Available for sale investment 142 137
Property, machinery and mining assets, net 49,675 47,094
Deferred debt issuance costs 2,128 2,170
Deferred income tax assets 475 507
Goodwill 1,113 1,070
Total assets 59,870 59,301
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 777 718
Fair value of detachable warrants liability 2,018 1,100
Short term bank loans 1,795 1,314
Other payables and accruals 4,031 3,469
Taxes payable 212 257
Due to related parties 2,162 2,062
Total current liabilities 10,995 8,920
Convertible notes payable 22,007 21,186
Deferred tax liabilities 1,201 1,201
Total liabilities 34,203 31,307
Minority interests 135 144
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Amounts in thousands, except share data)
March 31, December 31,
2008 2007
Unaudited Audited
Commitment and contingencies --
STOCKHOLDERS' EQUITY:
Common Stock, $0.001 par value:
Authorized - 50,000,000 shares (2006:
50,000,000 shares)
Issued and outstanding 22,214,514 shares
(2006: 21,297,700 shares) $ 22 $ 22
Additional paid-in capital 25,251 25,251
PRC statutory reserves 1,740 1,672
Accumulated other comprehensive income 3,135 2,112
Retained earnings (deficit) (4,616) (1,207)
Total stockholders' equity 25,532 27,850
Total liabilities and stockholders' equity 59,870 59,301
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except per share data)
For the Three Months
Ended March 31,
2008 2007
Unaudited Unaudited
Net revenue $ 744 $ 2,958
Cost of sales (552) (1,187)
Gross profit 192 1,771
Operating expenses:
Selling and distribution expenses (18) (46)
General and administrative expenses (1,974) (1,248)
Income (loss) from operations (1,800) 477
Other income (expense):
Interest expense (1,931) (1,589)
Other, net 357 9
Income (loss) from continuing operations before
income taxes and minority interests (3,374) (1,103)
Income tax (expenses) benefits 50 93
Income (loss) from continuing operations before
minority interests (3,424) (1,010)
Minority interests 15 19
Income (loss) from continuing operations (3,409) (991)
Discontinued operation
Loss from operations of discontinued component,
net of taxes (160)
Income(loss) from discontinued operations (160)
Net loss (3,409) (1,151)
Other comprehensive income:
Foreign currency translation adjustments 1,023 186
Comprehensive loss (2,386) (965)
Income (loss) per common share - basic and diluted
From continuing operations (0.15) (0.04)
From discontinued operations -- (0.01)
Net income (loss) (0.15) (0.05)
Weighted average common shares outstanding
Basic and diluted 22,215 21,298
The accompanying notes are an integral part of these consolidated
financial statements.
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
For the Three Months
Ended March 31,
2008 2007
Unaudited Unaudited
Cash flows from operating activities:
Loss from continuing operations $ (3,409) $ (991)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 459 413
Loss from investments -- 81
Deferred income tax benefits 32 (93)
Fair value adjustment of warrants 918 588
Accrual of coupon interests and accreted principal 368 350
Amortization of deferred financing costs 453 41
Amortization of debt issuance costs 42 100
Minority interests (9) (19)
Changes in operating assets and liabilities:
(Increase) decrease in -
Accounts receivable 670 366
Deposits and prepayments 246 (470)
Inventories (514) 225
Due from related companies -- (86)
Increase (decrease) in -
Accounts payable 59 247
Other payables and accruals 562 (749)
Taxes payable (45) (209)
Due to related parties 100 (39)
Net cash provided by (used in) operating
activities from continuing operations (68) (245)
Net cash provided by (used in) operating
activities from discontinued operations -- 80
Net cash provided by (used in) operating
activities (68) (165)
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
For the Three Months
Ended March 31,
2008 2007
Unaudited Unaudited
Cash flows from investing activities:
Purchases of property, machinery and mining
assets $ (1,623) $ (1,495)
(Increase) decrease in investment deposits -- (1,939)
Decrease (increase) in available-for-sale
securities - margin deposit -- 323
Net cash provided by (used in) investing
activities of continuing operations (1,623) (3,111)
Purchases of property, machinery and mining
assets of discontinued operations -- (1)
Net cash provided by (used in) investing
activities (1,623) (3,112)
Cash flows from financing activities:
Proceeds from short-term borrowings 481 220
Repayments of short-term borrowings -- (1,486)
Net cash provided by (used in) financing
activities 481 (1,266)
Foreign currency translation adjustment (374) 19
Net (decrease) increase in cash and cash
equivalents (1,584) (4,524)
Cash and cash equivalents at the beginning of
the period 2,949 18,932
Cash and cash equivalents at the end of the
period 1,365 14,408
Non-cash investing and financing activities
(None)
Supplemental disclosures of cash flow
information
Cash paid for interest expenses 108 39
Cash paid for income tax -- --
SOURCE China Shen Zhou Mining & Resources, Inc.
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Related links:
http://www.chinaszmg.com
CONTACT:
In China, Sterling Song, Senior Investor
Relations Manager of China Shen Zhou Mining & Resources, Inc.,
+86-10-6887-2811, or investor@chinaszky.com; or In the U.S.,
Valentine Ding, Investor Relations of Grayling Global,
+1-646-284-9412, or vding@hfgcg.com, for China Shen Zhou Mining
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