China Shen Zhou Reports Second Quarter 2012 Financial Results

News provided by

China Shen Zhou Mining & Resources, Inc.

Aug 14, 2012, 09:00 ET

BEIJING, Aug. 14, 2012 /PRNewswire-Asia-FirstCall/ -- China Shen Zhou Mining & Resources, Inc. ("China Shen Zhou" or the "Company") (NYSEAMEX: SHZ), a Company engaged in the exploration, development, mining and processing of fluorite, barite, zinc, copper, and other nonferrous metals in China, today announced financial results for the second quarter and first six months ended June 30, 2012.

Second Quarter Financial Summary

  • Revenues were $7.6 million;
  • Gross profit was $1.4 million, a gross margin of 18.4%;
  • Net loss attributable to China Shen Zhou was $2.0 million, and net loss per basic and diluted share of five cents.

Ms. Xiaojing Yu, Chairperson and Chief Executive Officer of China Shen Zhou commented, "Despite the challenges we faced during the second quarter, Shen Zhou Mining is still backed by high quality fluorspar asset with its highly strategic value and broad downstream applications. We believe our stock is deeply undervalued. Meanwhile, the Chinese government's support of fluorite as a key industrial raw material continues to raise industry barriers of entry. Our large fluorite deposits, established marketing channels and strategic partnerships with downstream fluoride manufacturers position us well to lead the Chinese fluorite industry and capture future opportunities."

Second Quarter Financial Results

Net sales were $7.6 million compared with $9.1 million in the second quarter of 2011. The decrease in net sales was mainly due to decreased sales volume for fluorite and zinc concentrate powder.

Fluorite powder sales volume decreased 21% year-over-year to 13,100 tons while sales volume for zinc concentrate powder decreased by 62% year-over-year to 585 metric tons. Fluorite revenues and nonferrous metal revenues decreased by 9% and 39% respectively compared with the second quarter of 2011.

Gross profit was $1.4 million compared with $4.3 million in the second quarter of 2011.  Gross margin was 18.4% during the second quarter of 2012.

General and administrative ("G&A") expenses in the second quarter of 2012 decreased to $2.9 million from $3.3 million in the 2011 second quarter. G&A expense as a percentage of total net sales was 37.9% compared with 36.3% in the second quarter of 2011, mainly due to the decrease in net revenues.

Operating loss for the 2012 second quarter was $4.1 million compared with operating income of $1.0 million in the same period in 2011.

Net loss attributable to Chin Shen Zhou was $2.0 million, or a net loss of $0.05 per diluted and basic share, compared with a net income of $0.1 million, or net income of $0.01 per diluted and basic share, in the second quarter of 2011.  

Six-Month Financial Results

Net revenues for the first six months ended June 30, 2012, were $9.1 million, compared with $11.0 million during the same period of 2011. 

Gross profit for the first six months ended June 30, 2012 was $2.0 million, compared with $5.0 million during the same period of 2011.  Gross profit margin was 22.4%, compared with 45.5% one year ago.

Net loss attributable to China Shen Zhou for the first six months ended June 30, 2012 was $5.1 million, compared to a net loss of $1.5 million for the same period in 2011. Basic and diluted net loss per share was $0.15 and $0.05 for the first six months ended June 30, 2012 and 2011, respectively.

About China Shen Zhou Mining & Resources, Inc.

China Shen Zhou Mining & Resources, Inc., through its subsidiaries, is engaged in the exploration, development, mining, and processing of fluorite, barite 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) fluorite and barite extraction and processing in the Wuchuan County of Guizhou province (c) fluorite and barite extraction and processing in the Yanhe County of Guizhou province; (d)fluorite extraction and processing in Jingde County, Anhui Province; (e) zinc/copper/lead processing in Wulatehouqi of Inner Mongolia; and (f) zinc/copper exploration, mining and processing in Xinjiang. For more information, please visit http://www.chinaszmg.com/.

Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "will", "believes", "expects" or similar expressions. These forward-looking statements may also include statements about our proposed discussions related to our business or growth strategy, which is subject to change. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at http://www.sec.gov .

Contact Information

Min Liu          
Investor Relations      
Grayling
Tel: +86-186-6537-8749
[email protected]

Shiwei Yin
Grayling
Tel: +1-646-284-9474           
[email protected]

- Tables Follow -

 

CHINA SHEN ZHOU MINING & RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

 


June 30,
2012

December 31,
2011


(Unaudited)


ASSETS










Current assets:






Cash and cash equivalents

$

1,245

$

5,569

Notes receivable, net

805


1,019

Accounts receivable, net

427


3,332

Advances to suppliers

1,375


1,833

Acquisition deposit

-


2,359

Other deposits

293


258

Inventories

10,667


7,479

Due from related parties

3,094


-

Restricted assets

1,583


2,536

Deferred financing costs

740


-

Total current assets

20,229


24,385








Restricted assets

310


175

Prepayment for vehicle rent

400


443

Property, machinery and mining assets, net

82,899


60,313

Total assets

$

103,838

$

85,316








LIABILITIES AND STOCKHOLDERS' EQUITY














Current liabilities:






Accounts payable

$

2,197

$

3,324

Short term loans

10,532


11,996

Receipts in advance

5,305


1,528

Other payables and accruals

3,940


2,772

Government loan

1,631


-

Convertible preferred stock

3,333


-

Derivative liabilities

1,377


-

Due to related parties

239


250

Taxes payable

1,932


1,877

Total current liabilities

30,486


21,747








Long term loans

1,742


-

Total liabilities

32,228


21,747








STOCKHOLDERS' EQUITY:














Convertible preferred stock ($0.001 par value; 10,000 shares and 0 share authorized as of June 30, 2012 and December 31, 2011 respectively; 3,333 shares and 0 shares issued and outstanding as of June 30, 2012 and December 31, 2011 respectively)

-


-

Common stock ($0.001 par value; 50,000,000 shares authorized; 39,323,772 shares and 32,285,973 shares issued and outstanding as of June 30, 2012 and December 31, 2011 respectively)

39


32

Additional paid-in capital

62,925


58,425

Statutory reserves

1,732


1,732

Accumulated other comprehensive income

6,476


6,109

Accumulated deficit

(18,487)


(13,344)

Stockholders' equity - China Shen Zhou Mining & Resources, Inc. and Subsidiaries

52,685


52,954

Noncontrolling interest

18,925


10,615

Total stockholders' equity

71,610


63,569

Total liabilities and stockholders' equity

$

103,838

$

85,316

CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share data)

(Unaudited)

 


For the Three Months Ended

For the Six Months Ended


June 30,

2012

June 30,

2011

June 30,

2012

June 30,

2011

Net revenue

$

7,550

$

9,117

$

9,056

$

11,013

Cost of sales

6,164


4,773


7,026


6,005

Gross profit

1,386


4,344


2,030


5,008
















Operating expenses:














Selling and distribution expenses

20


24


44


60

General and administrative expenses

2,862


3,313


5,724


5,503

Provision for doubtful accounts

2,044


13


2,113


(77)

Impairment provision for inventories

547


-


547


-

Total operating expenses

5,473


3,350


8,428


5,486
















Net income (loss) from operations

(4,087)


994


(6,398)


(478)
















Other income (expense):














Interest expense

(431)


(201)


(893)


(346)

Warrant modification

-


-


(578)


-

Fair value change at derivative liabilities

3,035


-


3,006


-

Amortization of Warrants attached to preferred stock

(346)


-


(375)


-

Amortization of deferred financing cost for preferred stock

(253)


-


(270)


-

Other, net

(110)


115


(135)


73

Total other income (loss)

1,895


(86)


755


(273)
















Income (loss) from continuing operations before income taxes

(2,192)


908


(5,643)


(751)
















Income tax expenses

(178)


(280)


(178)


(280)
















Income (loss) from continuing operations

(2,370)


628


(5,821)


(1,031)
















Discontinued operations:














Loss from operations of discontinued component, net of taxes

-


-


-


(7)

Loss on disposal of discontinued subsidiary, net of taxes

-


(82)


-


(82)

Loss from discontinued operations

-


(82)


-


(89)
















Net income (loss)

(2,370)


546


(5,821)


(1,120)

Add (less): Noncontrolling interests attributable to the noncontrolling interests

460


(418)


739


(361)

Less: Preferred stock dividends

(56)


-


(61)


-

Net income (loss) - attributable to China Shen Zhou Mining & Resources, Inc. and Subsidiaries

(1,966)


128


(5,143)


(1,481)
















Other comprehensive income:














Foreign currency translation adjustments

(20)


615


367


772

Comprehensive income (loss)

$

(1,986)

$

743

$

(4,776)

$

(709)
















Net income (loss) per common share – basic and diluted














From continuing operations

$

(0.05)

$

0.01

$

(0.15)

$

(0.05)

From discontinued operations

-


(0.00)


-


(0.00)


$

(0.05)

$

0.01

$

(0.15)

$

(0.05)
















Weighted average common shares outstanding














Basic and Diluted

36,974


30,836


34,932


30,448

CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands, except share data)

(Unaudited)

 


For the Six Months Ended


June 30,
2012

June 30,
2011

Cash flows from operating activities:






Net loss

$

(5,143)

$

(1,481)

Adjustments to reconcile net loss to net cash used in operating activities:






Loss from operations of discontinued component, net of income tax benefits

-


7

Loss on sale of discontinued operations, net of income taxes

-


82

Provision for doubtful accounts

2,113


(78)

Impairment provision for inventories

547


-

Warrant modification

578


-

Deemed dividend expense

61


-

Amortization of warrants attached to preferred stock

375


-

Amortization of deferred financing costs for preferred stock

270


-

Fair value change at derivative liabilities

(3,006)


-

Depreciation and amortization

3,013


2,096

Stock-based compensation

-


972

Noncontrolling interests

(739)


361

Changes in operating assets and liabilities:






(Increase) decrease in






Notes receivable

222


(774)

Accounts receivable

3,312


(1,922)

Advances to suppliers

813


(503)

Other receivable

(1,699)


-

Other deposits

124


(417)

Prepayment for vehicle rent

45


-

Prepayment for office rent

-


82

Due from related parties

(3,080)


-

Inventories

(3,243)


(586)

Restricted assets

921


(101)

Increase (decrease) in






Accounts payable

(1,756)


(886)

Receipts in advance

2,896


56

Other payables and accruals

(4,705)


(1,489)

Taxes payable

(1,106)


656

Net cash used in operating activities from continuing operations

(9,187)


(3,925)

Net cash used in operating activities from discontinued operations

-


(37)

Net cash used in operating activities

(9,187)


(3,962)

Cash flows from investing activities:






Purchases of property, machinery and mining assets

(1,592)


(2,179)

Acquisition of subsidiaries, net of cash and cash equivalents acquired

-


(3,604)

Net cash used in investing activities

(1,592)


(5,783)

Cash flows from financing activities:






Due to related parties

(249)


(646)

Proceeds from issuance of common stock

-


20,000

Issuance costs of common stock

-


(1,516)

Proceeds from convertible preferred stock

5,000


-

Proceeds from warrants

224


-

Issuance costs of convertible preferred stock

(506)


-

Repayment of short-term loans

(14,016)


(7,396)

Proceeds from short-term loans and long-term loans

15,995


6,452

Net cash provided by financing activities

6,448


16,894








Foreign currency translation adjustment

7


138








Net (decrease) increase in cash and cash equivalents

(4,324)


7,287








Cash and cash equivalents at the beginning of the period

5,569


1,545

Cash and cash equivalents at the end of the period

$

1,245

$

8,832








Non-cash investing and financing activities






Shares issued to Acquire Xinyi Fluorite

$

-

$

9,467

Additional shares issued to Acquire Xinyi Fluorite

$

1

$

-

Shares issued as acquisition consideration for Dongsheng Mining, Meilan Mining and Qianshi Resources

$

5,676

$

-

Shares issued as the installment shares to redeem a third of the convertible preferred stock

$

1,667

$

-








Supplemental disclosures of cash flow information:






Cash paid for interest expenses

$

873

$

262

Cash paid for income tax

$

789

$

-

SOURCE China Shen Zhou Mining & Resources, Inc.

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