CHINA SHEN ZHOU MINING & RESOURCES INC. 
By BEIJING, March 27, 2011 /PRNewswire-Asia-FirstCall/ -- China Shen Zhou Mining & Resources, Inc. ("China Shen Zhou" or the "Company") (NYSE AMEX: SHZ), a Company engaged in the exploration, development, mining and processing of fluorite, barite, zinc, lead, copper, and other nonferrous metals in China, today announced record revenues for the fourth quarter and fiscal year ended December 31, 2011.
2011 Fourth Quarter Financial Highlights
-- Net revenue increased 154.3% to a record high of $12.4 million from $4.9
million in the fourth quarter of 2010
-- Gross profit increased 659.8% to $5.6 million compared with $0.7 million
for the same period of 2010
-- Net income attributable to the Company and its subsidiaries rose to $1.1
million compared with a net loss of $2.6 million for the same period of
2010
-- Net income per common share from continuing operations was $0.04 versus
a net loss of $0.08 in the same period of 2010
-- Cash and cash-equivalents were $5.6 million
2011 Financial Highlights
-- Net revenue increased by 163.1% to a record $30.6 million compared to
2010
-- Gross margin rose to 44.2% from 25.9% in 2010
-- Net profit attributable to the Company and its subsidiaries was $0.3
million versus a loss of $3.2 million in 2010
Ms. Xiaojing Yu, Chairperson and Chief Executive Officer, commented, "We are very pleased to report record revenues for 2011. Our revenue and profit margin increased significantly. The Chinese government's new policies limited fluorite production and encouraged the integration and consolidation within the fluorite industry. China Shen Zhou is benefitting from our growing economies-of-scale, and our acquisition of valuable fluorite mining assets and processing capabilities. We are continuing our strategy of acquiring high-quality fluorite mines, while we are also focusing our research and development efforts on the fluorine chemical industry. In addition to adding a number of valuable assets to our current operations, we plan to leverage our enhanced platform by integrating it into the high value-added fluorine chemical industry."
Unaudited Fourth Quarter Financial Results
For the fourth quarter of 2011, net revenue of $12.4 million was the highest for any quarter in the Company's history. The $7.5 million increase from $4.9 million reported in the fourth quarter of 2010 was primarily due to record fourth quarter revenue from fluorite sales by the Company's Xiangzhen subsidiary.
Gross profit increased by $4.9 million to $5.6 million for the fourth quarter of 2011 from $0.7 million in the fourth quarter of 2010. The increase in gross profit was mainly due to increased fluorite prices and a higher percentage of revenue from fluorite product sales, which have a higher profit margin, compared to the same period of 2010.
General & Administrative ("G&A") expenses in the fourth quarter of 2011 were $3.6 million compared with $1.1 million in the fourth quarter of 2010. G&A expenses as a percentage of total net revenue were 29.3% compared with 22.5% for the same period of 2010. The increase was mainly due to (i) increased administrative expense and depreciation and amortization expense amounting to $814,000 for the newly acquired Xinyi Fluorite and ((ii) increased professional fees amounting to approximately $1,298,000 for the U.S. Securities projects, Investor relations, Xingzhen Mining's exploration, and other professional acitivities.
Operating expenses in the fourth quarter of 2011 totaled $3.7 million compared with $2.8 million in the fourth quarter of 2010.
Net income from operations in the fourth quarter was $1.9 million versus a loss from operations of $2.0 million in the fourth quarter of 2010.
Net profit attributable to the Company and its subsidiaries for the fourth quarter of 2011 was $1.15 million compared with a net loss of $2.5 million for the same period of 2010.
Basic and fully diluted earnings per share were $0.04 or ($0.09) for the years ended December 31, 2011 and 2010, respectively.
Fiscal Year 2011 Results
Annual net revenue increased 163.1% to a record $30.6 million for fiscal 2011, compared with net revenue of $11.6 million in 2010. The increase in net revenue was mainly due to higher average fluorite prices and increased sales volume in the fluorite market. The average price for fluorite powder rose over 101% to $329 per metric ton in 2011 compared with $164 per metric ton in 2010. Approximately 58,000 metric tons of Fluorite powder were sold in 2011 versus approximately 29,000 metric tons in 2010. Fluorite revenue increased by 219% to $25.6 million for 2011 from $8.0 million for 2010. Nonferrous metals revenue for 2011 increased 38% to $5.0 million, compared to 2010.
Gross profit increased by approximately $10.5 million to $13.5 million from $3.0 million in fiscal year 2010. The increase in gross profit was mainly due to increased fluorite prices and the higher percentage of revenue from fluorite product sales, which have a higher profit margin, compared to the same period last year Gross profit from fluorite was approximately $12.9 million and $2.0 million for the years ended December 31, 2011 and 2010, respectively. Gross profit from our nonferrous metal segment was approximately $0.6 million and $1.1 million for the years ended December 31, 2011 and 2010, respectively. Gross margin increased to 44.2% in 2011 versus 25.9% in 2010.
Selling and distribution expenses rose 94.2% to $202,000 and represented almost 1.0% of sales in 2011. The higher expenses were due to the increased sales volume in 2011.
General and administrative expenses increased to $11.2 million in 2011 from $4.1 million in 2010. The increase was mainly due to (i) 400,000 shares of common stock with the fair value of amount to $972,000 being granted by the board of directors on June 20, 2011 to the employees under the 2009 Omnibus Long-term Incentive Plan; (ii) increased administrative expense and depreciation and amortization expense amounting to $1,684,000 for the newly acquired Xinyi Fluorite and (iii) increased professional fees amounting to approximately $2,168,000 for the U.S. Securities projects, Xinyi Fluorite acquisition audit, Investor relations, Xingzhen Mining's exploration, and other professional activities.
Interest expense increased by approximately $0.09 million as compared to the same period of 2010.
Net income attributable to the Company for the year ended December 31, 2011 was approximately $0.35 million, a difference of $3.64 million compared to net loss of $3.29 million for 2010. Basic and fully diluted earnings per share were $0.01 or ($0.12) for the year ended December 31, 2011 and 2010, respectively.
As of December 31, 2011, the Company had cash and cash equivalents of $5.6 million compared to $1.5 million at the end of 2010. Total shareholders' equity grew to $63.6 million from $21.8 million at the end of 2010.
Recent Developments
On January 13, 2011, the Company through its subsidiary, Xingzhen Mining, acquired a 55% equity interest in Xinyi Fluorite. In 2011, Xinyi Fluorite extracted approximately 14,000 metric tons of fluorite ore, produced 9,000 metric tons of fluorite powder, and sold 9,000 metric tons of fluorite powder for approximately US$3.16 million, which accounted for approximately 12% of the revenues of our fluorite business.
On April 12, 2011, the Company through its subsidiary, Qianzhen Mining, entered into an equity transfer agreement to sell its 60% equity interest in Qingshan Metal to a Chinese citizen, Mr. Mao Huang, a minority shareholder of Xingzhen Mining.
On September 29, 2011, the Ministry of Industry and Information Technology of China announced "the provisional measures of fireclay (high-alumina clay) fluorite industry admittance notice", which explicitly states that enterprises that did not meet the requirements of this notice would not be able to obtain a production quota distribution priority. Our Company is a leader in the fluorite industry and as such, its subsidiaries all meet the requirements of this notice and have the advantage of distribution and integration.
In July 2011, SRK Consulting China Ltd. ("SRK"), an institution that specializes in evaluating the particular geology of a region, completed an independent assessment of the current status and prospective future production of the Sumochaganaobao Fluorite Mine ("Sumo Mine") resource, and provided an independent technical report containing Mineral Resource and Ore Reserve information. On November 18 2011, Xinyi Fluorite requested that SRK evaluate Xinyi Mine No. 1's current situation and potential extraction volume. A technical report that satisfies the JORC standard was expected to be completed in 2012.
Outlook
"We are excited about our growth potential for the remainder of 2012 and beyond," continued Ms. Xiaojing Yu. "Our acquisition strategy has created a broad foundation for future expansion into high value industry segments. We continue to capitalize on new national policies which encourage consolidation in the fluorite industry. We are seeking opportunities to acquire nonferrous metal, precious metal, and non-metallic mineral resources and plan to further expand Xingzhen's production capacity, while we accelerate Xingzhen Mining's exploration efforts."
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 Wuchuan County of Guizhou province; (c) fluorite and barite extraction and processing in 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: +1-646-284-9413
min.liu@grayling.com
CHINA SHEN ZHOU MINING & RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Audited, amounts in thousands, except share data)
December 31,
------------
2011 2010
---- ----
ASSETS
Current assets:
Cash and cash equivalents $5,569 $1,545
Notes receivable, net 1,019 -
Accounts receivable, net 3,332 162
Prepayment for office rent - 82
Advances to suppliers 1,833 333
Acquisition deposit 2,359 -
Other deposits, net 258 517
Inventories 7,479 7,243
Restricted assets 2,536 -
Assets - Discontinued operations - 1,188
--- -----
Total current assets 24,385 11,070
Restricted assets 175 70
Prepayment for vehicle rent 443 -
Property, machinery and mining
assets, net 60,313 33,052
------ ------
Total assets $85,316 $44,192
======= =======
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $3,324 $2,434
Short term bank loans 11,996 8,061
Receipts in advance 1,528 2,058
Other payables and accruals 2,772 4,053
Due to related parties 250 -
Taxes payable 1,877 644
Liabilities -Discontinued
operations - 100
--- ---
Total current liabilities 21,747 17,350
Long term loans - 2,630
Due to related parties - 2,439
--- -----
Total liabilities 21,747 22,419
STOCKHOLDERS' EQUITY:
Common Stock ($0.001 par value;
50,000,000 shares authorized;
32,285,973 shares and 27,974,514
shares issued and outstanding
as of December 31, 2011 and 2010,
respectively 32 28
Additional paid-in capital 58,425 29,508
PRC statutory reserves 1,732 1,672
Accumulated other comprehensive
income 6,109 4,357
Accumulated deficit (13,344) (13,630)
------- -------
Stockholders' equity -China Shen
Zhou Mining & Resources, Inc. and
Subsidiaries 52,954 21,935
Noncontrolling interest 10,615 -
Noncontrolling interest -
Discontinued operations - (162)
--- ----
Total stockholders' equity 63,569 21,773
------ ------
Total liabilities and stockholders'
equity $85,316 $44,192
======= =======
CHINA SHEN ZHOU MINING & RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Audited, amounts in thousands, except per share data)
For the Years Ended
December 31,
------------
2011 2010
---- ----
Net revenue $30,551 $11,612
Cost of sales 17,051 8,604
------ -----
Gross profit 13,500 3,008
Operating expenses:
Selling and distribution expenses 202 104
General and administrative expenses 11,197 4,085
Provision for doubtful accounts (148) 355
Impairment provision for inventories - 287
Impairment provision for mining assets - 1,007
--- -----
Total operating expenses 11,251 5,838
------ -----
Net income (loss) from operations 2,249 (2,830)
----- ------
Other income (expense):
Interest expense (682) (589)
Provision for available for sale
investment - (148)
Other, net (40) 472
--- ---
Total other expense (722) (265)
Income (loss) from continuing
operations before income taxes 1,527 (3,095)
----- ------
Income tax benefits (expenses) (1,235) -
------ ---
Income (loss) from continuing
operations 292 (3,095)
--- ------
Discontinued operations (Note 4):
Loss from operations of discontinued
component (7) (193)
Loss on disposal of discontinued
subsidiary (82) -
--- ---
Loss from discontinued operations (89) (193)
--- ----
Net income (loss) 203 (3,288)
Add: Noncontrolling interests
attributable to the noncontrolling
interests 143 -
--- ---
Net income (loss) -attributable to
China Shen Zhou Mining & Resources,
Inc. and Subsidiaries 346 (3,288)
--- ------
Other comprehensive income:
Foreign currency translation
adjustments 1,752 518
----- ---
Comprehensive income (loss) $2,098 $(2,770)
====== =======
Net income (loss) per common share -
basic and diluted
From continuing operations $0.01 $(0.11)
From discontinued operations (0.00) (0.01)
----- -----
$0.01 $(0.12)
===== ======
Weighted average common shares
outstanding
- Basic and Diluted 31,369 27,902
====== ======
CHINA SHEN ZHOU MINING & RESOURCES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Audited, amounts in thousands, except share data)
For the Year Ended December
31,
----------------------------
2011 2010
---- ----
Cash flows from operating activities:
Net income (loss) $346 $(3,288)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Loss from operations of discontinued
component, net of income tax
benefits 7 194
Loss on sale of discontinued
operations, net of income taxes 82 -
Provision for doubtful accounts (131) 355
Impairment provision for inventories - 287
Provision for available for sale
investment - 148
Impairment provision for mining
assets - 1,007
Depreciation and amortization 4,171 2,434
Noncontrolling interests (143) -
Forgiveness of payroll payables 50 (300)
Stock-based compensation 972 -
Changes in operating assets and
liabilities:
(Increase) decrease in -
Notes receivable (1,019) -
Accounts receivable (3,075) 48
Advances to suppliers (1,398) 371
Other deposits 230 (636)
Prepayment for vehicle rent (443) -
Prepayment for office rent 82 198
Inventories 53 (3,687)
Restricted assets (2,639) 693
Increase (decrease) in -
Accounts payable 449 (2,386)
Receipts in advance (612) 53
Other payables and accruals (2,167) 420
Taxes payable 1,207 300
----- ---
Net cash used in operating activities
from continuing operations (3,978) (3,789)
Net cash (used in) provided by
operating activities from
discontinued operations (37) 59
--- ---
Net cash used in operating activities (4,015) (3,730)
------ ------
Cash flows from investing activities:
Purchases of property, machinery and
mining assets (5,193) (2,099)
Acquisition of subsidiaries, net of
cash and cash equivalents acquired (6,022) -
Sales of property, machinery and
mining assets 189 75
--- ---
Net cash used in investing activities
from continuing operations (11,026) (2,024)
Net cash used in investing activities
from discontinued operations - (4)
--- ---
Net cash used in investing activities (11,026) (2,028)
------- ------
Cash flows from financing activities:
Due to related parties (656) 67
Proceeds from issuance of common
shares 20,000 -
Issuance costs of common shares (1,516) -
Repayment at short-term bank loans (8,964) (5,036)
Proceeds from short-term bank loans 9,704 12,142
----- ------
Net cash provided by financing
activities 18,568 7,173
------ -----
Foreign currency translation
adjustment 497 (203)
--- ----
Net increase in cash and cash
equivalents 4,024 1,212
Cash and cash equivalents at the
beginning of the year 1,545 333
===== ===
Cash and cash equivalents at the end
of the year $5,569 $1,545
====== ======
Non-cash investing and financing
activities
Shares issued to employees as share
based compensation $ - $752
=== === ====
Shares issued to Acquire Xinyi
Fluorite $9,467 $ -
====== === ===
Supplemental disclosures of cash flow
information:
Cash paid for interest expenses $582 $415
==== ====
Cash paid for income tax $57 $ -
=== === ===
SOURCE China Shen Zhou Mining & Resources, Inc.
