China Shen Zhou Reports Record 2011 Fourth Quarter And Fiscal Year Revenues
BEIJING, March 27, 2011 /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, 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
[email protected]
CHINA SHEN ZHOU MINING & RESOURCES, INC. AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
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(Audited, amounts in thousands, except share data) |
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December 31, |
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|
|
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 |
|
|
|
|
|
|
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|
LIABILITIES AND STOCKHOLDERS' EQUITY |
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|
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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: |
|
|
|
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|
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|
Common Stock ($0.001 par value; 50,000,000 shares authorized; |
|
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32,285,973 shares and 27,974,514 shares issued and outstanding |
|
|
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|
|
|
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 |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Audited, amounts in thousands, except per share data) |
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|
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For the Years Ended |
|||||
|
|
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 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(Audited, amounts in thousands, except share data) |
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|
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|
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.
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