EX-99.1 2 v132244_ex99-1.htm Unassociated Document
 
  
 
China Shen Zhou Mining & Resources, Inc. Announces Third Quarter 2008 Financial Results
 
BEIJING, November 13, 2008/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 third quarter ended September 30, 2008.

*All figures are in U.S. dollars
 
Third Quarter 2008 Financial Results

Net revenues for the three months ended September 30, 2008 were $2.9 million, representing a $1.4 million or 32% decrease as compared to the same period of 2007. The decrease in net revenues is mainly attributable to Qianzhen Mining, whose zinc processing operations were materially impacted by a shortage of ore supplies and sharp decrease of metal price, which resulted in a reduction of revenue of 77% or approximately $1.7 million as compared to the third quarter of 2007. Net revenue from Xiangzhen Mining’s fluorite products decreased 49% to $1.1 million as compared to 2007 due to the trial operation of the newly completed fluorite processing plant of Xiangzhen..
 
Net revenue for the third quarter did increase by 142% over the second quarter.
 
For the third quarter gross profit was $495,000 which decreased by approximately 74% from $1.9 million for the same period of 2007; gross profit margin dropped from 44% to 17% for the third quarter of 2008. The fixed amortization of mining assets and rights over the terms of the extraction license (three years or six years) that is included in the costs of sales caused the movement of the costs of sales to be disproportionate to actual production and sales, resulting in a lower gross profit margin. The low zinc price also created downside pressure on the gross profit margin of the nonferrous segment.

Gross profit for the third quarter did increase by $543,000 over the second quarter. Gross profit margin also increased by 21% over the second quarter.

For the third quarter general and administrative expenses increased by approximately $0.9 million to $2.6 million in 2008 as compared to $1.6 million in 2007. The significant increase was primarily due to (i) trial operating expense of $0.57 million by Xiangzhen and (ii) increased administrative expense of $0.3 million for the newly acquired Tun-Lin in Kyrgyzstan.
 
 
1
 
 
Interest expense decreased approximately $57,000 in the third quarter as compared to the same period of 2007. The decrease in interest expense is mainly due to the difference in revaluation of the warrant liability.

Net loss for the third quarter was $2.0 million, a difference of $2.1 million compared to net income of $0.1 million for the same period of 2007. Basic earnings (loss) per share were $(0.091) and $0.005 for the three months ended September 30, 2008 and 2007, respectively.
 
Net revenues for the nine months ended September 30, 2008 were $4.8 million, representing a $7.2 million or 60% decrease as compared to the same period of 2007.
Gross profit for the nine months ended September 30, 2008, was $639,000 which decreased by approximately 91% from $6.8 million for the same period of 2007. Gross profit margin dropped from 57% for the nine months ended September 30 2007 to 13 % for the same period of 2008.

For the nine months ended September 30, 2008, general and administrative expenses increased by approximately $3.0 million to $6.9 million as compared to $3.9 million for the same period in 2007.

Net loss for the nine months was $7.5 million, a difference of $7.7 million compared to net income of $0.2 million for the same period in 2007. Basic earnings (loss) per share were $(0.339) and $0.010 for the nine months ended September 30, 2008 and 2007, respectively.

Cash and cash equivalents were $0.46 million as of September 30, 2008, a decrease of $2.5 million as compared to the balance at December 31, 2007 of $3 million.
 
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 extraction and processing 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.

 
2
 
 
Financial Tables to Follow
 
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
 
   
 September 30,
  
December 31,
  
   
 2008
 
2007
 
   
 Unaudited
  
Audited
  
ASSETS
              
               
Current assets:
              
Cash and cash equivalents
  
$
462
 
$
2,949
  
Accounts receivable, net
    
482
   
2,481
 
Other deposits and prepayments, net
    
1,699
   
1,254
 
Inventories
    
4,510
   
1,639
 
Total current assets
    
7,153
   
8,323
 
               
Available for sale investment
    
147
   
137
 
Prepayment for office rent
    
540
        
Property, machinery and mining assets, net
    
49,998
   
47,094
 
Deferred debt issuance costs
    
1,859
   
2,170
 
Deferred income tax assets
    
686
   
507
 
Goodwill
    
1,146
   
1,070
 
Total assets
  
$
61,529
 
$
59,301
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
               
Current liabilities:
              
Accounts payable
  
$
1,212
 
$
718
  
Fair value of detachable warrants liability
   
116
   
1,100
 
Short term bank loans
    
1,760
   
1,314
 
Other payables and accruals
    
8,082
   
3,469
 
Taxes payable
    
314
   
257
 
Due to related parties
    
3,094
   
2,062
 
Total current liabilities
    
14,578
   
8,920
 
               
Convertible notes payable
    
23,478
   
21,186
 
Deferred tax liabilities
    
1,201
   
1,201
 
Total liabilities
    
39,257
   
31,307
 
               
MINORITY INTEREST
   
88
   
144
 
 
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
 
   
 September 30,
  
December 31,
  
   
 2008
 
2007
 
   
 Unaudited
  
Audited
  
Commitment and contingencies
         
-
  
               
STOCKHOLDERS’ EQUITY:
              
Common Stock, $0.001 par value,
              
50,000,000 shares authorized, 22,214,514 shares issued and outstanding
 
$
22
 
$
22
  
Additional paid-in capital
    
25,251
   
25,251
 
PRC statutory reserves
    
1,537
   
1,537
 
Accumulated other comprehensive income
    
4,104
   
2,247
 
Retained earnings (deficit)
    
(8,730
)
  
(1,207
)
Total stockholders’ equity
    
22,184
   
27,850
 
Total liabilities and stockholders’ equity
  
$
61,529
 
$
59,301
  
               

 
3
 
 
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share data)
 
   
For the Three Months Ended
  
For the Nine Months Ended
  
   
9/30/2008
  
9/30/2007
  
9/30/2008
  
9/30/2007
  
   
Unaudited
  
Unaudited
  
Net revenue
  
$
2,924
    
4,273
 
$
4,845
    
12,063
 
Cost of sales
    
(2,429
)
  
(2,399
)
  
(4,206
)
  
(5,227
)
Gross profit
    
495
   
1,874
   
639
   
6,836
 
Operating expenses:
                          
Selling and distribution expenses
    
(36
)
  
(72
)
  
(72
)
  
(207
)
General and administrative expenses
    
(2,550
)
  
(1,640
)
  
(6,942
)
  
(3,893
)
Income (loss) from operations
    
(2,091
)
  
162
   
(6,375
)
  
2,736
 
Other income (expense):
                          
Interest expense
    
(87
)
  
(144
)
  
(1,932
)
  
(2,489
)
Other, net
    
48
   
161
   
590
   
146
 
Income (loss) from continuing operations before income taxes and minority interests
    
(2,130
)
  
179
   
(7,717
)
  
393
 
Income tax (expenses) benefits
    
85
   
(47
)
  
129
   
32
 
Income (loss) from continuing operations before minority interests
    
(2,045
)
  
132
   
(7,588
)
  
425
 
Minority interests
    
20
   
(15
)
  
65
   
(6
)
Income (loss) from continuing operations
    
(2,025
)
  
117
   
(7,523
)
  
419
 
Discontinued operation
                         
Loss from operations of discontinued component, net of taxes
    
-
   
(2
)
  
-
   
(195
)
Income(loss) from discontinued operations
    
-
   
(2
)
  
-
   
(195
)
Net income (loss)
    
(2,025
)
  
115
   
(7,523
)
  
224
 
Other comprehensive income:
                      
Foreign currency translation adjustments
    
301
   
306
   
1,857
   
894
 
Comprehensive income (loss)
  
$
(1,724
)
  
421
 
$
(5,666
)
  
1,118
 
                       
Income (loss) per common share - basic and diluted
                         
From continuing operations
    
(0.091
)
  
0.005
   
(0.339
)
  
0.019
 
From discontinued operations
    
-
   
-
   
-
   
(0.009
)
Net income (loss)
  
$
(0.091
)
  
0.005
 
$
(0.339
)
  
0.010
 
Weighted average common shares outstanding
                      
Basic and Diluted
    
22,215
   
22,215
   
22,215
   
21,872
 

 
4
 
 
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
 
   
For the Nine Months Ended
  
   
September 30,
  
   
2008
  
 2007
  
   
Unaudited
  
 Unaudited
 
Cash flows from operating activities:
             
(Loss)income from continuing operations
 
$
(7,523
)
$
419
 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
              
Depreciation and amortization
    
3,288
   
1,302
 
Loss from investments
   
-
    
81
 
Deferred income tax benefits
    
(179
)
  
(158
)
Fair value adjustment of warrants
    
(984
)
  
(239
)
               
Accrual of coupon interest and accreted principal
    
1,112
   
1,058
 
Amortization of deferred financing costs
   
1,179
   
108
 
Amortization of debt issuance costs
   
311
   
245
 
Minority interests
   
(65
)
  
6
 
Changes in operating assets and liabilities:
              
(Increase) decrease in -
              
Accounts receivable
    
1,999
   
(2,023
)
Deposits and prepayments
    
(443
)
  
1,107
 
Prepayment for office rent
    
(540
)
      
Inventories
    
(2,871
)
  
(189
)
Due from related companies
    
-
    
(847
)
Increase (decrease) in -
              
Accounts payable
    
494
   
786
 
Other payables and accruals
   
2,804
   
748
 
Taxes payable
    
57
   
(191
)
Due to related parties
    
1,032
   
28
 
Net cash (used in) provided by operating activities from continuing operations
    
(329
)
  
2,241
 
Net cash provided by operating activities from discontinued operations
    
-　
    
4
 
Net cash (used in) provided by operating activities
    
(329
)
  
2,245
 

 
5
 
 
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
 
   
For the Nine Months Ended
  
   
September 30,
  
   
2008
  
 2007
  
   
Unaudited
  
 Unaudited
  
Cash flows from investing activities:
              
Purchases of property, machinery and mining assets
    
(1,975
)
  
(15,419
)
Decrease in investment deposits
   
-
    
1,025
 
Acquisition of subsidiaries, net of cash and cash equivalents acquired
    
-
    
(466
)
Decrease in available-for-sale securities - margin deposit
    
-　
    
331
 
Net cash used in investing activities of continuing operations
    
(1,975
)
  
(14,529
)
               
Purchases of property, machinery and mining assets of discontinued operations
        
(388
)
Net cash used in investing activities
    
(1,975
)
  
(14,917
)
               
Cash flows from financing activities:
              
Issuance costs of convertible note
  
$
-
  
$
(2,096
)
Proceeds from short-term borrowings
    
446
   
226
 
Repayments of short-term borrowings
    
　-
    
(1,470
)
Net cash provided by (used in) financing activities
    
446
   
(3,340
)
             
Foreign currency translation adjustment
    
(629
)
  
265
 
             
Net decrease in cash and cash equivalents
    
(2,487
)
  
(15,747
)
               
Cash and cash equivalents at the beginning of the period
    
2,949
   
18,932
 
Cash and cash equivalents at the end of the period
  
$
462
  
$
3,185
 
               
Supplemental disclosures of cash flow information
              
Cash paid for interest expenses
  
$
254
  
$
1,037
 
Cash paid for income tax
  
$
-
  
$
-
  
 

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.:
David Elias
Investor Relations
DME Capital LLC
Tel: +1-516-967-0205
Email: dave@dmecapital.com
 
 
6