(All figures are in U.S. dollars)
BEIJING, April 15 /PRNewswire-Asia-FirstCall/ -- China Shen Zhou Mining & Resources, Inc. (NYSE Amex: 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 fourth quarter and full year ended December 31, 2008.
Fourth Quarter 2008 Financial Results
Net revenues for the three months ended December 31, 2008 were $2.29 million, representing a $0.004 million or 0.17% increase as compared to the same period of 2007. The increase in net revenues is mainly attributable to Xingzhen Mining, which started operation in the second quarter of 2008, and generated some revenues in the fourth quarter of 2008.
For the fourth quarter gross profit was $0.67 million which increased from a gross loss of $0.33 million for the same period of 2007.
For the fourth quarter general and administrative expenses decreased by approximately $0.54 million to $2.31 million in 2008 as compared to $2.85 million in 2007,which was mainly attributable to the significant decrease in the fees for professional services and employees' salaries.
Net loss for the fourth quarter was $4.69 million, a difference of $1.82 million compared to net loss of $2.87 million for the same period of 2007. Basic loss per share fully diluted were $0.21 and $0.13 for the three months ended December 31, 2008 and 2007, respectively.
Full Year 2008 Financial Results
Net revenues for the full year ended December 31, 2008 were $7.14 million, representing a $7.21 million or 50.27% 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 the price of metals, which resulted in a reduction of revenue of 82.36% or approximately $5.83 million as compared to 2007. Net revenue from Xiangzhen Mining's fluorite products decreased 43.92% to $3.70 million as compared to $6.61 million in 2007 due to the fact the trial operation of the newly completed fluorite processing plant was unsatisfactory.
Gross profit for the full year ended December 31, 2008 was $1.31 million, which decreased by approximately 79.91% from $6.51 million for the same period of 2007. Gross profit margin dropped significantly from 45.34% for the twelve months ended December 31, 2007 to 18.31% for the same period 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. Low zinc prices also created downside pressure on the gross profit margin of the nonferrous segment.
For the full year ended December 31, 2008, general and administrative expenses increased by approximately $2.6 million to $9.3 million as compared to $6.7 million for the same period in 2007. The significant increase in general and administrative expenses was primarily due to (i) trial operating expenses of $1.70 million for Xiangzhen and (ii) increased administrative expense of $0.90 million for the newly acquired Tun-Lin in Kyrgyzstan.
Net loss for the full year 2008 was $12.15 million, a difference of $9.50 million compared to net loss of $2.65 million for the same period in 2007. Basic loss per share fully diluted were $0.55 and $0.12 for the full year ended December 31, 2008 and 2007, respectively.
Cash and cash equivalents were $0.21 million as of December 31, 2008, a decrease of $2.74 million as compared to the balance at December 31, 2007 of $2.95 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.
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) December 31, December 31, 2008 2007 Audited Audited ASSETS Current assets: Cash and cash equivalents $205 $2,949 Accounts receivable, net 561 2,481 Other deposits and prepayments, net 1,167 1,254 Inventories 2,958 1,639 Total current assets 4,891 8,323 Prepayment for office rent 505 -- Available for sale investment 146 137 Property, machinery and mining assets, net 47,716 47,094 Deferred debt issuance costs 1,755 2,170 Deferred income tax assets -- 507 Goodwill -- 1,070 Total assets $55,013 $59,301 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,471 $718 Fair value of detachable warrants liability 33 1,100 Short term bank loans 1,756 1,314 Other payables and accruals 4,794 3,469 Taxes payable 411 257 Due to related parties 2,666 2,062 Total current liabilities 13,131 8,920 Convertible notes payable, net 24,251 21,186 Deferred tax liabilities -- 1,201 Total liabilities 37,382 31,307 Minority interests 22 144 CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) (Amounts in thousands, except share data) December 31, December 31, 2008 2007 Audited Audited Commitment and contingencies STOCKHOLDERS' EQUITY: Common Stock, $0.001 par value: Authorized ¨C 50,000,000 shares (72006: 50,000,000 shares) Issued and outstanding 22,214,514shares 22 22 72214514(2006: 21,297, shares) Additional paid-in capital 25,251 25,251 PRC statutory reserves 1,672 1,672 Accumulated other comprehensive income 4,020 2,112 Accumulated deficit (13,356) (1,207) Total stockholders' equity 17,609 27,850 Total liabilities and stockholders' equity $55,013 $59,301 The accompanying notes are an integral part of these consolidated financial statements. CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands, except per share data) Years Ended December 31, 2008 2007 Audited Audited Net revenue $7,137 14,351 Cost of sales (5,830) (7,844) Gross profit 1,307 6,507 Operating expenses: Selling and distribution expenses (146) (223) General and administrative expenses (9,252) (6,741) Income (loss) from operations (8,091) (457) Impairment of goodwill (1,127) Other income (expense): Interest expense (2,744) (3,962) Other, net 227 397 Income (loss) from continuing operations before income taxes and minority interests (11,735) (4,022) Income tax (expenses) benefits (544) (45) Income (loss) from continuing operations before minority interests (12,279) (4,067) Minority interests 130 114 Income (loss) from continuing operations (12,149) (3,953) Discontinued operation Loss from operations of discontinued component, net of taxes -- (197) Gain on disposal of discontinued subsidiary, net of taxes -- 1,504 Income (loss) from discontinued operations -- 1,307 Net loss (12,149) (2,646) Other comprehensive income: Foreign currency translation adjustments 1,908 1,512 Comprehensive loss $(10,241) (1,134) Income (loss) per common share ¨C basic and diluted From continuing operations (0.55) (0.18) From discontinued operations -- 0.06 Net income (loss) $(0.55) (0.12) Weighted average common shares outstanding Basic and Diluted 22,215 21,959 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 Year Ended December 31, 2008 2007 Audited Audited Cash flows from operating activities: (Loss) income from continuing operations $(12,149) $(3,953) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: -- -- Provision for doubtful accounts (2) 39 Provision for deferred tax asset 685 -- Impairment provision for fixed assets -- 60 Impairment of goodwill 1,127 -- Depreciation and amortization 4,367 2,415 Loss from investments -- 86 Deferred income tax benefits (178) (43) Fair value adjustment of warrants (1,067) 70 (Gain / Loss on disposal of fixed assets -- 109 Accrual of coupon interests and accreted principal 1,489 1,417 Amortization of deferred financing costs 1,576 496 Amortization of debt issuance costs 415 348 Minority interests (122) (100) Changes in operating assets and liabilities: -- -- (Increase) decrease in - -- -- Accounts receivable 1,922 (1,575) Deposits and prepayments 87 2,930 Inventories (1,319) (354) Due from related companies -- 71 Increase (decrease) in - -- -- Accounts payable 990 95 Other payables and accruals 1,325 1,007 Taxes payable 154 (328) Due to related parties 604 805 Net cash provided by operating activities from continuing operations (96) 3,595 Net cash (used in) operating activities from discontinued operations -- (45) Net cash provided by operating activities (96) 3,550 CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) For the Year Ended December 31, 2008 2007 Audited Audited Cash flows from investing activities: Purchases of property, machinery and mining assets (3,095) (19,632) Prepayment for office rent (505) -- Decrease in investment deposits -- 888 Acquisition of subsidiaries, net of cash and cash equivalents acquired -- (403) Decrease in available-for-sale securities ¨C margin deposit -- 326 Net cash used in investing activities of continuing operations (3,600) (18,821) Net cash provided by disposal of discontinued operations -- 2,759 Purchases of property, machinery and mining assets of discontinued operations -- (544) Net cash used in investing activities (3,600) (16,606) Cash flows from financing activities: Issuance costs of convertible note -- (2,156) Proceeds from short-term borrowings 442 Repayments of short-term borrowings -- (1,354) Net cash provided by (used in) financing activities 442 (3,510) Foreign currency translation adjustment 510 615 Net decrease in cash and cash equivalents (2,744) (15,951) Cash and cash equivalents at the beginning of the period 2,949 18,900 Cash and cash equivalents at the end of the period $205 2,949 Non-cash investing and financing activities Issuance of shares for acquisition -- 3,670 Additional capital caused by the reduction of conversion price from $3.2 to $2.25 -- 7,716 Supplemental disclosures of cash flow information Cash paid for interest expenses $298 1,631 Cash paid for income tax $1 45 The accompanying notes are an integral part of these consolidated financial statements. For more information, please contact: In China: Investor Relations China Shen Zhou Mining & Resources, Inc. Tel: +86-10-6887-2811 Email: investor@chinaszky.com Web: http://www.chinaszmg.com/ In the U.S.: Investor Relations DME Capital LLC David Elias Tel: +1-516-967-0205 Email: dave@dmecapital.com
China Shen Zhou Mining & Resources, Inc.
CONTACT: In China: Investor Relations: China Shen Zhou Mining & Resources,
Inc., +86-10-6887-2811 or investor@chinaszky.com; In the U.S.: Investor
Relations, DME Capital LLC, David Elias at +1-516-967-0205, or
dave@dmecapital.com
Web site: http://www.chinaszmg.com/
