2014

China Natural Resources Releases Interim Results of Operations

HONG KONG, Dec. 2 /PRNewswire-FirstCall/ -- CHINA NATURAL RESOURCES, INC. (Nasdaq: CHNR), a company based in the People's Republic of China, today released unaudited interim financial statements for the three and six months ended June 30, 2009 as follows:

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                    INCOME (LOSS)  (UNAUDITED)
     FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
      (Amounts in thousands, except share and per share data)

                                Three Months Ended June 30
                                --------------------------
                                      2008        2009           2009
                                      ----        ----           ----
                                       RMB         RMB            US$

NET SALES                           29,722      12,999          1,903
COST OF SALES                      (12,141)    (12,371)        (1,811)
                                   -------     -------         ------
GROSS PROFIT                        17,581         628             92

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES,
   including share-based
    compensation
   expense of RMB13,008
    (US$1,904)
   for the six months ended
    June 30, 2009
   (2008: RMB13,008) and
    RMB6,504 (US$952) for the
    three months ended
   June 30, 2009 (2008:
    RMB6,504)                       (9,157)    (12,870)        (1,884)
                                    ------     -------         ------
OPERATING INCOME (LOSS)
 FROM CONTINUING OPERATIONS          8,424     (12,242)        (1,792)
INTEREST INCOME                        372          65              9
OTHER INCOME, NET                       67           -              -
LOSS ATTRIBUTABLE TO
 INVESTMENT
   IN UNCONSOLIDATED INVESTEE       (2,306)     (2,960)          (433)
                                    ------      ------           ----
INCOME (LOSS) FROM
 CONTINUING OPERATIONS
 BEFORE INCOME TAXES                 6,557     (15,137)        (2,216)
INCOME TAXES                        (4,304)       (714)          (105)
                                    ------        ----           ----
INCOME (LOSS) FROM
 CONTINUING OPERATIONS               2,253     (15,851)        (2,321)

DISCONTINUED OPERATIONS
INCOME (LOSS) FROM
 DISCONTINUED OPERATIONS            20,207           5              1
                                    ------         ---            ---
NET INCOME (LOSS)                   22,460     (15,846)        (2,320)
OTHER COMPREHENSIVE INCOME
 (LOSS)
Foreign currency
 translation adjustments
    Attributable to CHNR
     Shareholders                   (3,504)        (60)            (9)
    Attributable to non-
     controlling interests               -           -              -
                                       ---         ---            ---
COMPREHENSIVE INCOME (LOSS)         18,956     (15,906)        (2,329)
Less comprehensive loss
 attributable to non-
 controlling interests                   -         833            122
                                       ---         ---            ---
COMPREHENSIVE INCOME (LOSS)
 ATTRIBUTABLE TO CHNR
 SHAREHOLDERS                       18,956     (15,073)        (2,207)
                                    ======     =======         ======

NET INCOME (LOSS)
 ATTRIBUTABLE TO:
     CHNR Shareholders              22,460     (15,013)        (2,198)
     Non-controlling interests           -        (833)          (122)
                                       ---        ----           ----
                                    22,460     (15,846)        (2,320)
                                    ======     =======         ======

NET INCOME (LOSS)
 ATTRIBUTABLE TO CHNR
 SHAREHOLDERS:
        Continuing operations        2,253     (15,016)        (2,198)
        Discontinued operations     20,207           3              -
                                    ------         ---            ---
                                    22,460     (15,013)        (2,198)
                                    ======     =======         ======

INCOME (LOSS) PER SHARE:
Basic
  Income (loss) from
   continuing operations              0.12       (0.71)         (0.10)
  Income (loss) from
   discontinued operations            1.05           -              -
                                      ----         ---            ---
  Net income (loss) per share         1.17       (0.71)         (0.10)
                                      ====       =====          =====

Diluted
  Income (loss) from
   continuing operations              0.10       (0.71)         (0.10)
  Income (loss) from
   discontinued operations            0.88           -              -
                                      ----         ---            ---
  Net income (loss) per share         0.98       (0.71)         (0.10)
                                      ====       =====          =====

WEIGHTED AVERAGE NUMBER
     OF SHARES OUTSTANDING
         Basic                  19,323,416  21,123,416     21,123,416
                                ==========  ==========     ==========

         Diluted                22,926,151  21,123,416     21,123,416
                                ==========  ==========     ==========



                                Six Months Ended June 30
                                ------------------------
                                      2008        2009         2009
                                      ----        ----         ----
                                       RMB         RMB          US$

NET SALES                           38,268      17,563        2,571
COST OF SALES                      (16,023)    (16,268)      (2,381)
                                   -------     -------       ------
GROSS PROFIT                        22,245       1,295          190

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES,
   including share-based
    compensation
   expense of RMB13,008
    (US$1,904)
   for the six months ended
    June 30, 2009
   (2008: RMB13,008) and
    RMB6,504 (US$952) for the
    three months ended
   June 30, 2009 (2008:
    RMB6,504)                      (21,658)    (26,409)      (3,867)
                                   -------     -------       ------
OPERATING INCOME (LOSS)
 FROM CONTINUING OPERATIONS            587     (25,114)      (3,677)
INTEREST INCOME                      1,121         421           61
OTHER INCOME, NET                       48         529           78
LOSS ATTRIBUTABLE TO
 INVESTMENT
   IN UNCONSOLIDATED INVESTEE       (4,437)     (5,665)        (829)
                                    ------      ------         ----
INCOME (LOSS) FROM
 CONTINUING OPERATIONS
 BEFORE INCOME TAXES                (2,681)    (29,829)      (4,367)
INCOME TAXES                        (4,941)     (1,266)        (185)
                                    ------      ------         ----
INCOME (LOSS) FROM
 CONTINUING OPERATIONS              (7,622)    (31,095)      (4,552)

DISCONTINUED OPERATIONS
INCOME (LOSS) FROM
 DISCONTINUED OPERATIONS            24,451     (15,052)      (2,204)
                                    ------     -------       ------
NET INCOME (LOSS)                   16,829     (46,147)      (6,756)
OTHER COMPREHENSIVE INCOME
 (LOSS)
Foreign currency
 translation adjustments
    Attributable to CHNR
     Shareholders                  (15,753)        438           64
    Attributable to non-
     controlling interests               -           -            -
                                       ---         ---          ---
COMPREHENSIVE INCOME (LOSS)          1,076     (45,709)      (6,692)
Less comprehensive loss
 attributable to non-
 controlling interests                   -       7,567        1,108
                                       ---       -----        -----
COMPREHENSIVE INCOME (LOSS)
 ATTRIBUTABLE TO CHNR
 SHAREHOLDERS                        1,076     (38,142)      (5,584)
                                     =====     =======       ======

NET INCOME (LOSS)
 ATTRIBUTABLE TO:
     CHNR Shareholders              16,829     (38,580)      (5,648)
     Non-controlling interests           -      (7,567)      (1,108)
                                       ---      ------       ------
                                    16,829     (46,147)      (6,756)
                                    ======     =======       ======

NET INCOME (LOSS)
 ATTRIBUTABLE TO CHNR
 SHAREHOLDERS:
        Continuing operations       (7,622)    (29,549)      (4,326)
        Discontinued operations     24,451      (9,031)      (1,322)
                                    ------      ------       ------
                                    16,829     (38,580)      (5,648)
                                    ======     =======       ======

INCOME (LOSS) PER SHARE:
Basic
  Income (loss) from
   continuing operations             (0.40)      (1.42)       (0.21)
  Income (loss) from
   discontinued operations            1.29       (0.43)       (0.06)
                                      ----       -----        -----
  Net income (loss) per share         0.89       (1.85)       (0.27)
                                      ====       =====        =====

Diluted
  Income (loss) from
   continuing operations             (0.34)      (1.42)       (0.21)
  Income (loss) from
   discontinued operations            1.10       (0.43)       (0.06)
                                      ----       -----        -----
  Net income (loss) per share         0.76       (1.85)       (0.27)
                                      ====       =====        =====

WEIGHTED AVERAGE NUMBER
     OF SHARES OUTSTANDING
         Basic                  18,982,757  20,883,085   20,883,085
                                ==========  ==========   ==========

         Diluted                22,235,670  20,883,085   20,883,085
                                ==========  ==========   ==========


                CONDENSED CONSOLIDATED BALANCE SHEETS
              AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
       (Amounts in thousands, except share and per share data)

                                      December
                                           31,     June 30,     June 30,
                                          2008         2009         2009
                                           RMB          RMB          US$
                                                (Unaudited)  (Unaudited)
ASSETS
CURRENT ASSETS
     Cash                              120,888      158,504       23,205
     Trade receivables:
         Related parties                70,830            -            -
         Others                          4,157        1,755          257
     Bills receivable                    1,460            -            -
     Note receivable                    96,166            -            -
     Inventories                        66,245        5,614          822
     Deferred tax assets                 5,470          966          141
     Other assets                       25,061       42,670        6,247
                                        ------       ------        -----

                                       390,277      209,509       30,672
ASSETS CLASSIFIED AS HELD FOR
 SALE                                        -      442,543       64,790
                                           ---      -------       ------

TOTAL CURRENT ASSETS                   390,277      652,052       95,462

INVESTMENT IN UNCONSOLIDATED
 INVESTEES                              22,210       17,489        2,560

ADVANCES TO UNCONSOLIDATED
 INVESTEES, NET                         39,290       38,346        5,614

PROPERTY AND EQUIPMENT, NET            238,591      185,545       27,164

DEPOSITS FOR BUSINESS
 ACQUISITIONS AND OTHER                119,741       48,119        7,045
                                       -------       ------        -----

TOTAL ASSETS                           810,109      941,551      137,845
                                       =======      =======      =======

LIABILITIES AND EQUITY
CURRENT LIABILITIES
     Bills payable                           -       10,000        1,464
     Accounts payable                    7,361       17,100        2,504
     Advance from customers             15,261        2,781          407
     Accrued liabilities                 8,014        3,001          439
     Income tax and other taxes
      payable                           12,368        1,192          175
     Other payables                     25,485       26,933        3,943
     Current portion of related party
      capital lease obligation           9,977            -            -
     Related party payable              18,316      168,396       24,654
                                        ------      -------       ------

                                        96,782      229,403       33,586
LIABILITIES ASSOCIATED WITH
 ASSETS CLASSIFIED AS HELD FOR
 SALE                                        -      107,174       15,690
                                           ---      -------       ------

TOTAL CURRENT LIABILITIES               96,782      336,577       49,276
                                        ------      -------       ------

NON CURRENT LIABILITIES
       Related party capital lease
        obligation, net of current
        portion                         10,780            -            -
       Long term loan                        -      100,000       14,640
       Other payables                   10,087       82,612       12,095
                                        ------       ------       ------

TOTAL NON-CURRENT LIABILITIES           20,867      182,612       26,735
                                        ------      -------       ------

TOTAL LIABILITIES                      117,649      519,189       76,011
                                       -------      -------       ------

EQUITY
China Natural Resources, Inc.
 equity:
    Preferred shares, no par:
      Authorized -10,000,000 shares;         -            -            -
    Common shares, no par:
      Authorized -200,000,000 shares;
    Issued and outstanding -
     19,623,416 and 21,123,416 shares
     at December 31, 2008 and June
     30, 2009, respectively            312,081      312,081       45,689
    Reserves                             7,331        7,331        1,073
    Additional paid-in capital         228,752      288,159       42,187
    Excess of purchase price over net
     asset value                        (7,149)    (313,139)     (45,844)
    Retained earnings                  173,087      134,507       19,692
    Other comprehensive loss           (35,561)     (35,123)      (5,142)
                                       -------      -------       ------

TOTAL CHINA NATURAL RESOURCES,
 INC. EQUITY                           678,541      393,816       57,655

NON-CONTROLLING INTERESTS               13,919       28,546        4,179
                                        ------       ------        -----

TOTAL LIABILITIES AND EQUITY           810,109      941,551      137,845
                                       =======      =======      =======


Mr. Feilie Li, the Company's Chairman and CEO, commented on the 2009 interim results "the first half of 2009 posted a challenge to the operation of China Natural Resources. The global financial crisis caused the PRC economy to slow down sharply. Base metal prices fell in general as compared to the first half of 2008 amid slowing industrial production. However, China is expected to recover at a faster pace than other countries, and our mining operations are poised to benefit from the mainland's growth prospects and supportive policies. The China economy grew 7.9% year on year in the second quarter which suggests that the China economy is expanding and steel demand from downstream customers is recovering. We expect ore prices to rise in 2010 as demand for steel recovers and a rebound in industrial production growth. We remain committed to our strategy in expanding our coal and base metal resources in the PRC."

For the convenience of the reader, amounts in Renminbi ("RMB") have been translated into United States dollars ("US$") at the applicable rate of US$1.00 = RMB6.8305 as quoted by Bloomberg Finance L.P. as of June 30, 2009. The Renminbi is not freely convertible into foreign currencies and no representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate, or at all.

The condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2009 (unaudited) and the condensed consolidated balance sheet as of June 30, 2009 (unaudited) have been prepared in accordance with generally accepted accounting principles in the United States but omit certain financial statements and note disclosure that would be included in full financial statements prepared in accordance with US GAAP. The condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2009 (unaudited) and the condensed consolidated balance sheet as of June 30, 2009 (unaudited) are derived from, and should be read in conjunction with, the Company's unaudited condensed consolidated financial statements for the three and six months ended June 30, 2009 and 2008, which was filed with the Securities and Exchange Commission on December 2, 2009 under cover of Form 6-K. The results of operations for the six months ended June 30, 2009 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2009.

About China Natural Resources, Inc.

China Natural Resources, Inc., a British Virgin Islands corporation, through its operating subsidiaries in the People's Republic of China, is currently engaged in (a) the acquisition and exploitation of mining rights, including the exploration, mineral extraction, processing and sale of iron, zinc and other nonferrous metals, extracted or produced at mines primarily located in Anhui Province in the PRC, and (b) the acquisition, exploration, development and production of coal resources in Guizhou province in the PRC.

This press release includes forward-looking statements within the meaning of federal securities laws. These forward-looking statements are based upon assumptions believed to be reliable, but involve risks and uncertainties that may cause actual results of operations to differ materially from the forward-looking statements. Among the risks and uncertainties that could cause our actual results to differ from our forward-looking statements are our intent, belief and current expectations as to business operations and operating results of the Company, uncertainties regarding the governmental, economic and political circumstances in the People's Republic of China, risks and hazards associated with the Company's mining activities, uncertainties associated with ore reserve estimates, uncertainties associated with metal price volatility, uncertainties associated with the Company's reliance on third-party contractors and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. Although the Company's management believes that the expectations reflected in forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to be accurate.

SOURCE China Natural Resources, Inc.



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