China Natural Resources Releases 2010 Annual Results of Operations

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Jun 30, 2011, 05:47 ET

HONG KONG, June 30, 2011 /PRNewswire/ -- CHINA NATURAL RESOURCES, INC. (NASDAQ: CHNR), a company based in the People's Republic of China, today released results of operations for the year ended December 31, 2010 (derived from the Company's audited financial statements) as follows.

CHINA NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(Amounts in thousands, except share and per share data)

	Year Ended December 31,
	2008	2009		2010		2010
	RMB	RMB		RMB		US$
NET SALES
Related parties	26,210		63,025		—		—
Third parties	74,707		44,725		100,813		15,259
	100,917		107,750		100,813		15,259
COST OF SALES
Related parties	(25,452)		(61,887)		—		—
Third parties	(34,953)		(33,749)		(58,832)		(8,904)
	(60,405)		(95,636)		(58,832)		(8,904)
GROSS PROFIT	40,512		12,114		41,981		6,355
ADMINISTRATIVE EXPENSES, including share-based compensation expense of RMB26,016 (US$3,938) in 2008, 2009 and 2010	(48,407)		(57,271)		(92,090)		(13,938)
OTHER OPERATING EXPENSES	—		(9,316)		(9,031)		(1,367)

LOSS FROM OPERATIONS	(7,895)		(54,473)		(59,140)		(8,950)

FINANCE COST	(8)		(11)		(6,007)		(909)
INTEREST INCOME	2,158		2,654		1,112		168
LOSS ATTRIBUTABLE TO INVESTMENTS IN UNCONSOLIDATED INVESTEES	(9,691)		(11,211)		(6,310)		(955)
GAIN ON DISPOSAL OF UNCONSOLIDATED INVESTEES	—		—		30,571		4,627
GAIN FROM BARGAIN PURCHASE OF A SUBSIDIARY	—		—		624,148		94,468
OTHER EXPENSES	(2,985)		(236)		(1,874)		(282)
	(10,526)		(8,804)		641,640		97,117
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX	(18,421)		(63,277)		582,500		88,167

INCOME TAX EXPENSE	(6,294)		(2,438)		(12,224)		(1,850)
(LOSS) INCOME FROM CONTINUING OPERATIONS	(24,715)		(65,715)		570,276		86,317

DISCONTINUED OPERATIONS
Income (loss) from discontinued Mark Faith operations, net of tax	24,560		(10,937)		—		—
Gain on disposal of Mark Faith	78,877		123,133		—		—
INCOME FROM DISCONTINUED OPERATIONS	103,437		112,196		—		—

NET INCOME	78,722		46,481		570,276		86,317
NET INCOME (LOSS) ATTRIBUTABLE TO:
CHNR Shareholders	78,722		54,140		574,395		86,940
Non-controlling interests	—		(7,659)		(4,119)		(623)
	78,722		46,481		570,276		86,317
NET (LOSS) INCOME ATTRIBUTABLE TO CHNR SHAREHOLDERS:
Continuing operations	(24,715)		(62,431)		574,395		86,940
Discontinued operations	103,437		116,571		—		—
	78,722		54,140		574,395		86,940


	Year Ended December 31,
	2008		2009		2010		2010
	RMB		RMB		RMB		US$
NET (LOSS) INCOME PER SHARE:
Basic
(Loss) income from continuing operations	(1.28)		(2.97)		25.59		3.87
Income from discontinued operations	5.36		5.55		—		—
Net income per share	4.08		2.58		25.59		3.87


NET (LOSS) INCOME PER SHARE:
Diluted
(Loss) income from continuing operations	(1.11)		(2.86)		25.25		3.82
Income from discontinued operations	4.64		5.34		—		—
Net income per share	3.53		2.48		25.25		3.82

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

Basic	19,276,019		21,004,238		22,443,416		22,443,416
Diluted	22,278,600		21,817,907		22,751,864		22,751,864

The consolidated statements of operations for the years ended December 31, 2008, 2009 and 2010 have been prepared in accordance with generally accepted accounting principles in the United States, and are derived from, and should be read in conjunction with, the Company's consolidated financial statements for the years ended December 31, 2008, 2009 and 2010, as filed with the Securities and Exchange Commission on June 30, 2011 under cover of Form 20-F.

Mr. Li Feilie, the Company's Chairman, commented on the results: "China Natural Resources recorded total sales revenue of RMB100.81 million (US$15.26 million) in 2010, down by 6.44% from a year earlier. The drop in sales was mainly caused by the discontinuation of our copper business. While sales generated from our metal division achieved modest growth, our prime focus now is on our coal mining business. Following the gradual completion of construction and upgrade of our acquired coal mines, sales of coal will become our primary source of revenue in the coming years. The Company achieved net income attributable to shareholders of RMB574.40 million (US$86.94 million) in 2010, up by 961% from last year, of which RMB624.15 million (US$94.47 million) was derived from the bargain purchase gain relating to Guizhou Puxin's acquisition. The positive results reflect our ability to identify what we believe are undervalued assets, and signify the success of our strategy in pursuing growth through acquisition and consolidation of small to medium sized coal mines in mainland China. In view of the continuing economic growth in mainland China, we believe that demand for coal will continue to be robust in the foreseeable future. We are positive about the prospects of the coal mining industry in mainland China."

For the convenience of the reader, amounts in Renminbi ("RMB") have been translated into United States dollars ("US$") at the rate of US$1.00=RMB6.6070 quoted by Bloomberg Finance L.P. on December 31, 2010. The RMB is not freely convertible into foreign currencies and no representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate, or at all.

About China Natural Resources:
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, development and production of coal resources in Guizhou Province in the PRC.

Forward-Looking Statements:
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 uncertainties relating to possible future increases in operating expenses, including costs of labor and materials, 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.