x
|
Quarterly
Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
|
o
|
Transition
Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
|
Nevada
|
|
87-0430816
|
(State
or other jurisdiction
of
incorporation or organization)
|
|
(I.R.S.
Employer Identification No.)
|
No. 166
Fushi Road, Zeyang Tower, Suite 1211
Shijingshan
District, Beijing, China 100043
People’s
Republic of China
|
|
101304
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
(Do not check if a smaller reporting company)
|
Smaller
reporting company x
|
|
|
|
Page
|
PART
I -
|
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
|
Financial
Statements:
|
3
|
|
|
Consolidated
Balance Sheets as of September 30, 2008 (Unaudited) and December
31, 2007
|
3
|
|
|
Consolidated
Statements of Operations and Comprehensive Income (Unaudited)
Three
and Nine months ended September 30, 2008 and 2007
|
5
|
|
|
Consolidated
Statements of Stockholders’ Equity
Nine
months ended September 30, 2008 (Unaudited) and Year ended December
31,
2007
|
6
|
|
|
Consolidated
Statements of Cash Flows (Unaudited)
Nine
months ended September 30, 2008 and 2007
|
7
|
|
|
Notes
to Financial Statements (Unaudited)
|
9
|
|
|
|
|
Item
2.
|
|
Management's
Discussion and Analysis of Financial Condition and Results of Operations
|
31
|
|
|
|
|
Item
3.
|
|
Quantitative
and Qualitative Disclosures About Market Risk
|
44
|
|
|
|
|
Item
4.
|
|
Controls
and Procedures
|
44
|
|
|
|
|
PART
II -
|
|
OTHER
INFORMATION
|
46
|
|
|
|
|
Item
1.
|
|
Legal
Proceedings
|
46
|
|
|
|
|
Item
1A.
|
|
Risk
Factors
|
46
|
|
|
|
|
Item
2.
|
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
46
|
|
|
|
|
Item
3.
|
|
Defaults
Upon Senior Securities
|
46
|
|
|
|
|
Item
4.
|
|
Submission
of Matters to a Vote of Security Holders
|
46
|
|
|
|
|
Item
5.
|
|
Other
Information
|
46
|
|
|
|
|
Item
6.
|
|
Exhibits
|
46
|
CHINA
SHEN ZHOU MINING & RESOURCES, INC AND
SUBSIDIARIES
|
|||||
CONSOLIDATED
BALANCE SHEETS
|
|||||
(Amounts
in thousands, except share data)
|
September
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
Unaudited
|
Audited
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
462
|
$
|
2,949
|
|||
Accounts
receivable, net
|
482
|
2,481
|
|||||
Other
deposits and prepayments, net
|
1,699
|
1,254
|
|||||
Inventories
|
4,510
|
1,639
|
|||||
Total
current assets
|
7,153
|
8,323
|
|||||
Available
for sale investment
|
147
|
137
|
|||||
Prepayment
for office rent
|
540
|
||||||
Property,
machinery and mining assets, net
|
49,998
|
47,094
|
|||||
Deferred
debt issuance costs
|
1,859
|
2,170
|
|||||
Deferred
income tax assets
|
686
|
507
|
|||||
Goodwill
|
1,146
|
1,070
|
|||||
Total
assets
|
$
|
61,529
|
$
|
59,301
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,212
|
$
|
718
|
|||
Fair
value of detachable warrants liability
|
116
|
1,100
|
|||||
Short
term bank loans
|
1,760
|
1,314
|
|||||
Other
payables and accruals
|
8,082
|
3,469
|
|||||
Taxes
payable
|
314
|
257
|
|||||
Due
to related parties
|
3,094
|
2,062
|
|||||
Total
current liabilities
|
14,578
|
8,920
|
|||||
Convertible
notes payable
|
23,478
|
21,186
|
|||||
Deferred
tax liabilities
|
1,201
|
1,201
|
|||||
Total
liabilities
|
39,257
|
31,307
|
|||||
MINORITY
INTEREST
|
88
|
144
|
CHINA
SHEN ZHOU MINING & RESOURCES, INC AND
SUBSIDIARIES
|
|||||
CONSOLIDATED
BALANCE SHEETS (Continued)
|
|||||
(Amounts
in thousands, except share data)
|
September
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
Unaudited
|
Audited
|
||||||
Commitment
and contingencies (Note 20)
|
-
|
||||||
STOCKHOLDERS’
EQUITY:
|
|||||||
Common
Stock, $0.001 par value,
|
|||||||
50,000,000
shares authorized, 22,214,514 shares
issued
and outstanding
|
$
|
22
|
$
|
22
|
|||
Additional
paid-in capital
|
25,251
|
25,251
|
|||||
PRC
statutory reserves
|
1,537
|
1,537
|
|||||
Accumulated
other comprehensive income
|
4,104
|
2,247
|
|||||
Retained
earnings (deficit)
|
(8,730
|
)
|
(1,207
|
)
|
|||
Total
stockholders’ equity
|
22,184
|
27,850
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
61,529
|
$
|
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)
|
For
the Three Months Ended
|
For
the Nine Months Ended
|
||||||||||||
9/30/2008
|
9/30/2007
|
9/30/2008
|
9/30/2007
|
||||||||||
Unaudited
|
Unaudited
|
||||||||||||
Net
revenue
|
$
|
2,924
|
4,273
|
$
|
4,845
|
12,063
|
|||||||
Cost
of sales
|
(2,429
|
)
|
(2,399
|
)
|
(4,206
|
)
|
(5,227
|
)
|
|||||
Gross
profit
|
495
|
1,874
|
639
|
6,836
|
|||||||||
Operating
expenses:
|
|||||||||||||
Selling
and distribution expenses
|
(36
|
)
|
(72
|
)
|
(72
|
)
|
(207
|
)
|
|||||
General
and administrative expenses
|
(2,550
|
)
|
(1,640
|
)
|
(6,942
|
)
|
(3,893
|
)
|
|||||
Income
(loss) from operations
|
(2,091
|
)
|
162
|
(6,375
|
)
|
2,736
|
|||||||
Other
income (expense):
|
|||||||||||||
Interest
expense
|
(87
|
)
|
(144
|
)
|
(1,932
|
)
|
(2,489
|
)
|
|||||
Other,
net
|
48
|
161
|
590
|
146
|
|||||||||
Income
(loss) from continuing operations before income taxes and minority
interests
|
(2,130
|
)
|
179
|
(7,717
|
)
|
393
|
|||||||
Income
tax (expenses) benefits
|
85
|
(47
|
)
|
129
|
32
|
||||||||
Income
(loss) from continuing operations before minority
interests
|
(2,045
|
)
|
132
|
(7,588
|
)
|
425
|
|||||||
Minority
interests
|
20
|
(15
|
)
|
65
|
(6
|
)
|
|||||||
Income
(loss) from continuing operations
|
(2,025
|
)
|
117
|
(7,523
|
)
|
419
|
|||||||
Discontinued
operation (Note 3)
|
|||||||||||||
Loss
from operations of discontinued component, net of taxes
|
-
|
(2
|
)
|
-
|
(195
|
)
|
|||||||
Income(loss)
from discontinued operations
|
-
|
(2
|
)
|
-
|
(195
|
)
|
|||||||
Net
income (loss)
|
(2,025
|
)
|
115
|
(7,523
|
)
|
224
|
|||||||
Other
comprehensive income:
|
|||||||||||||
Foreign
currency translation adjustments
|
301
|
306
|
1,857
|
894
|
|||||||||
Comprehensive
income (loss)
|
$
|
(1,724
|
)
|
421
|
$
|
(5,666
|
)
|
1,118
|
|||||
Income
(loss) per common share - basic and diluted
|
|||||||||||||
From
continuing operations
|
(0.091
|
)
|
0.005
|
(0.339
|
)
|
0.019
|
|||||||
From
discontinued operations
|
-
|
-
|
-
|
(0.009
|
)
|
||||||||
Net
income (loss)
|
$
|
(0.091
|
)
|
0.005
|
$
|
(0.339
|
)
|
0.010
|
|||||
Weighted
average common shares outstanding
|
|||||||||||||
Basic
and Diluted
|
22,215
|
22,215
|
22,215
|
21,872
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
CHINA
SHEN ZHOU MINING & RESOURCES, INC AND
SUBSIDIARIES
|
||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE
INCOME
|
||||||||||||||||||||
(Amounts
in thousands)
|
Accumulated
|
||||||||||||||||||||||
Common
Stock
|
Additional
|
PRC
|
Retained
|
Other
|
Total
|
|||||||||||||||||
Number
of
|
paid-In
|
Statutory
|
Earnings
|
Comprehensive
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Reserves
|
(Deficit)
|
Income
|
Equity
|
||||||||||||||||
Balance
at January 1, 2007
|
21,298
|
$
|
21
|
$
|
13,865
|
$
|
1,111
|
$
|
1,865
|
$
|
600
|
$
|
17,462
|
|||||||||
Issuance
of shares for acquisitions
|
917
|
1
|
3,670
|
-
|
-
|
-
|
3,671
|
|||||||||||||||
Discount
of issuing the convertible notes
|
-
|
-
|
7,716
|
-
|
-
|
-
|
7,716
|
|||||||||||||||
Net
loss for the year ended December 31, 2007
|
-
|
-
|
-
|
-
|
(2,646
|
)
|
-
|
(2,646
|
)
|
|||||||||||||
Appropriation
of PRC statutory reserves
|
-
|
-
|
-
|
426
|
(426
|
)
|
-
|
-
|
||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
1,647
|
1,647
|
|||||||||||||||
Balance
at December 31, 2007
|
22,215
|
$
|
22
|
$
|
25,251
|
$
|
1,537
|
$
|
(1,207
|
)
|
$
|
2,247
|
$
|
27,850
|
||||||||
Net
loss for the nine months ended September 30 , 2008
|
-
|
-
|
-
|
-
|
(7,523
|
)
|
-
|
(7,523
|
)
|
|||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
1,857
|
1,857
|
|||||||||||||||
Balance
at September 30 , 2008 (Unaudited)
|
22,215
|
$
|
22
|
$
|
25,251
|
$
|
1,537
|
$
|
(8,730
|
)
|
$
|
4,104
|
$
|
22,184
|
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 Nine Months Ended
|
|||||||
September
30,
|
|||||||
2008
|
2007
|
||||||
Unaudited
|
Unaudited
|
||||||
Cash
flows from operating activities:
|
|||||||
(Loss)income
from continuing operations
|
$
|
(7,523
|
)
|
$
|
419
|
||
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities
|
|||||||
Depreciation
and amortization
|
3,288
|
1,302
|
|||||
Loss
from investments
|
-
|
81
|
|||||
Deferred
income tax benefits
|
(179
|
)
|
(158
|
)
|
|||
Fair
value adjustment of warrants
|
(984
|
)
|
(239
|
)
|
|||
Accrual
of coupon interest and accreted principal
|
1,112
|
1,058
|
|||||
Amortization
of deferred financing costs
|
1,179
|
108
|
|||||
Amortization
of debt issuance costs
|
311
|
245
|
|||||
Minority
interests
|
(65
|
)
|
6
|
||||
Changes
in operating assets and liabilities:
|
|||||||
(Increase)
decrease in -
|
|||||||
Accounts
receivable
|
1,999
|
(2,023
|
)
|
||||
Deposits
and prepayments
|
(443
|
)
|
1,107
|
||||
Prepayment
for office rent
|
(540
|
)
|
|||||
Inventories
|
(2,871
|
)
|
(189
|
)
|
|||
Due
from related companies
|
-
|
(847
|
)
|
||||
Increase
(decrease) in -
|
|||||||
Accounts
payable
|
494
|
786
|
|||||
Other
payables and accruals
|
2,804
|
748
|
|||||
Taxes
payable
|
57
|
(191
|
)
|
||||
Due
to related parties
|
1,032
|
28
|
|||||
Net
cash (used in) provided by operating activities from continuing
operations
|
(329
|
)
|
2,241
|
||||
Net
cash provided by operating activities from discontinued
operations
|
-
|
4
|
|||||
Net
cash (used in) provided by operating activities
|
(329
|
)
|
2,245
|
CHINA
SHEN ZHOU MINING & RESOURCES, INC AND
SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
|
||||||||
(Amounts
in thousands)
|
For
the Nine Months Ended
|
|||||||
September
30,
|
|||||||
2008
|
2007
|
||||||
Unaudited
|
Unaudited
|
||||||
Cash
flows from investing activities:
|
|||||||
Purchases
of property, machinery and mining assets
|
(1,975
|
)
|
(15,419
|
)
|
|||
Decrease
in investment deposits
|
-
|
1,025
|
|||||
Acquisition
of subsidiaries, net of cash and cash equivalents acquired
|
-
|
(466
|
)
|
||||
Decrease
in available-for-sale securities - margin deposit
|
-
|
331
|
|||||
Net
cash used in investing activities of continuing operations
|
(1,975
|
)
|
(14,529
|
)
|
|||
Purchases
of property, machinery and mining assets of discontinued
operations
|
(388
|
)
|
|||||
Net
cash used in investing activities
|
(1,975
|
)
|
(14,917
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Issuance
costs of convertible note
|
$
|
-
|
$
|
(2,096
|
)
|
||
Proceeds
from short-term borrowings
|
446
|
226
|
|||||
Repayments
of short-term borrowings
|
-
|
(1,470
|
)
|
||||
Net
cash provided by (used in) financing activities
|
446
|
(3,340
|
)
|
||||
Foreign
currency translation adjustment
|
(629
|
)
|
265
|
||||
Net
decrease in cash and cash equivalents
|
(2,487
|
)
|
(15,747
|
)
|
|||
Cash
and cash equivalents at the beginning of the period
|
2,949
|
18,932
|
|||||
Cash
and cash equivalents at the end of the period
|
$
|
462
|
$
|
3,185
|
|||
|
|||||||
Supplemental
disclosures of cash flow information
|
|||||||
Cash
paid for interest expenses
|
$
|
254
|
$
|
1,037
|
|||
Cash
paid for income tax
|
$
|
-
|
$
|
-
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
Name
|
Domicile and Date
of Incorporation
|
Paid-in Capital
|
Percentage
of Effective
Ownership
|
Principal Activities
|
|||||||
American
Federal Mining Group, Inc. (“AFMG”)
|
|
Illinois
November
15, 2005
|
|
USD
|
10
|
|
|
100
|
%
|
|
Investments
holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
Inner
Mongolia Xiangzhen Mining Industry Group Co. Ltd. (“Xiangzhen Mining”)
|
|
The
PRC
July
3,2002
|
|
RMB
|
88,860,699
|
|
|
100
|
%
|
|
Acquisition,
exploration and extraction, and development of natural resource
properties
|
|
|
|
|
|
|
|
|
|
|
|
|
Inner
Mongolia Wulatehouqi Qianzhen Ore Processing Co., Ltd. (“Qianzhen
Mining”)
|
|
The
PRC
September
22, 2002
|
|
RMB
|
37,221,250
|
|
|
100
|
%
|
|
Sales
and refinery of nonferrous metals, ore dressing, and sales of
chemical
products
|
|
|
|
|
|
|
|
|
|
|
|
|
Wulatehouqi
Qingshan Non-Ferrous Metal Developing Company Ltd. (“Qingshan Metal”)
|
|
The
PRC
April
23, 1995
(Acquired
on April 12, 2006)
|
|
RMB
|
4,100,000
|
|
|
60
|
%
|
|
Nonferrous
ore dressings, copper, zinc, lead etc
|
|
|
|
|
|
|
|
|
|
|
|
|
Xinjiang
Buerjin County Xingzhen Mining Company (“Xingzhen Mining”)
|
|
The
PRC
April
10,2006
(Acquired
on April 28, 2006)
|
|
RMB
|
1,000,000
|
|
|
90
|
%
|
|
Exploration
of solid metals, refinery and sales of mining products.
|
|
|
|
|
|
|
|
|
|
|
|
|
Tun-Lin
Limited Liability Company (“Tun-Lin”)
|
|
Kyrgyz
Republic
September
1,2005
(Acquired
on November 26, 2007)
|
|
KGS
|
5,000
|
|
|
100
|
% (a)
|
|
Investments
holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
Kichi-Chaarat
Closed Joint Stock Company (“Kichi-Chaarat”)
|
|
Kyrgyz
Republic September 17,1998 (Acquired on November 26, 2007)
|
|
KGS
|
10,000
|
|
|
100
|
%(b)
|
|
Exploration,
development, mining, and processing of gold, copper and other
mineral
products.
|
For the Nine Months Ended
September 30,
|
|||||||
|
2008
|
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
|
|
|
|||||
Revenue
|
Not
Applicable
|
$
|
204
|
||||
|
|||||||
Net (loss) from discontinued operations, net of income tax of nil
|
Not
Applicable
|
$
|
(195
|
)
|
Useful Life
|
||||
|
(In years)
|
|||
|
|
|||
Land
use rights
|
25
|
|||
Buildings
|
25
|
|||
Machinery
|
12
|
|||
Mining
assets
|
License
term
|
|||
Motor
vehicle
|
6
|
|||
Equipment
|
5
|
|||
Extraction
rights
|
License
term
|
|||
Exploration
rights
|
License
term
|
|
As of September 30, 2008
|
|
As of December 31, 2007
|
|
|
Balance
sheet items, except for the registered and paid-up capital and
retained
earnings, as of period end
|
|
US$1=RMB6.8183
US$1=KGS36.6688
|
|
US$1=RMB7.3046
US$1=KGS35.4988
|
|
|
For the
Nine Months Ended
September 30, 2008
|
|
For the
Nine Months Ended
September 30, 2007
|
|
|
Amounts
included in the statements of operations, statements of changes
in
stockholders’ equity and statements of cash flows for the
period
|
|
US$1=RMB6.9920
US$1=KGS35.9253
|
|
US$1=RMB7.5235
|
|
Level
1
|
—
quoted prices (unadjusted) in active markets for identical asset or
liabilities that the Company has the ability to access as of the
measurement date. Financial assets and liabilities utilizing Level
1
inputs include active exchange-traded securities and exchange-based
derivatives.
|
Level
2
|
—
inputs other than quoted prices included within Level 1 that are
directly
observable for the asset or liability or indirectly observable
through
corroboration with observable market data. Financial assets and
liabilities utilizing Level 2 inputs include fixed income securities,
non-exchange-based derivatives, mutual funds, and fair-value hedges.
|
Level
3
|
—
unobservable inputs for the asset or liability only used when there
is
little, if any, market activity for the asset or liability at the
measurement date. Financial assets and liabilities utilizing Level
3
inputs include infrequently-traded,non-exchange-based derivatives
and
commingled investment funds, and are measured using present value
pricing
models.
|
As
of September 30, 2008
|
Fair
Value
|
||||||||||||
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||
Warrants
liability
|
$
|
—
|
$
|
116
|
$
|
—
|
$
|
116
|
Balance
of warrants liability at December 31, 2007
|
$
|
1,100
|
||
Gain
on fair value adjustments to warrants liability
|
(984
|
)
|
||
Balance
at September 30, 2008
|
$
|
116
|
|
September 30,
2008
|
December 31,
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
|
|
|
|||||
Accounts
receivable
|
$
|
535
|
$
|
2,534
|
|||
Less:
Allowance for doubtful accounts
|
(53
|
)
|
(53
|
)
|
|||
|
$
|
482
|
$
|
2,481
|
|
September 30,
2008
|
December 31,
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
Prepayments
and advances (a)
|
$
|
1,138
|
$
|
840
|
|||
Tax
recoverable
|
62
|
||||||
Other
receivables
|
561
|
352
|
|||||
|
$
|
1,699
|
$
|
1,254
|
(a)
|
Prepayments
and advances as of December 31, 2007 included a deposit of $330,469
paid
to Wulatehouqi Zijin Mining Co., Ltd., the Company’s largest supplier, for
purchases of raw materials. The deposit was repaid in the first
quarter of
2008.
Prepayments
and advances as of September 30, 2008 include payments of $1,008,649
to
two mining service providers.
|
|
September 30,
2008
|
December 31,
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
Raw
materials - unprocessed ore
|
$
|
1,199
|
$
|
34
|
|||
Consumables
|
877
|
564
|
|||||
Finished
goods and semi-manufactured goods
|
2,434
|
1,041
|
|||||
|
$
|
4,510
|
$
|
1,639
|
|
September 30,
2008
|
December 31,
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
|
|
|
|||||
Land
use rights
|
$
|
1,704
|
$
|
1,591
|
|||
Buildings
|
13,127
|
4,218
|
|||||
Machinery
|
10,561
|
5,543
|
|||||
Mining
assets
|
7,807
|
3,962
|
|||||
Motor
vehicles
|
1,408
|
1,155
|
|||||
Equipment
|
327
|
249
|
|||||
Extraction
rights
|
20,225
|
19,675
|
|||||
Exploration
rights
|
1,687
|
1,574
|
|||||
Construction
in progress
|
2,847
|
15,020
|
|||||
|
59,693
|
52,987
|
|||||
Less:
|
|||||||
Accumulated
depreciation and amortization
|
(9,631
|
)
|
(5,833
|
)
|
|||
Impairment
provision
|
(64
|
)
|
(60
|
)
|
|||
|
$
|
49,998
|
$
|
47,094
|
|
(In thousands)
|
|||
Arising
from acquisition of Qingshan Metal, a subsidiary within the nonferrous
metals segment, in 2006
|
||||
|
||||
Balance
as of December 31, 2006
|
$
|
1,001
|
||
Exchange
realignment
|
69
|
|||
Balance
as of December 31, 2007
|
1,070
|
|||
Exchange
realignment
|
76
|
|||
Balance
as of September 30, 2008
|
$
|
1,146
|
As of September
30, 2008
|
As of December
31, 2007
|
||||||
|
|
|
|||||
Risk-free
interest rate
|
1.835
|
%
|
4.05
|
%
|
|||
Expected
volatility
|
89.73
|
%
|
57.22
|
%
|
|||
Term
|
1.25
years
|
2
years
|
|
September
30,
2008
|
December
31,
2007
|
|||||
|
(in
thousands)
|
(in
thousands)
|
|||||
10.37%
note payable to Baiyin Credit Union matured on February 16, 2008
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, guaranteed by Qianzhen Mining
|
|
96
|
|||||
10.37%
note payable to Baiyin Credit Union matured on February 16, 2008
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, guaranteed by Qianzhen Mining
|
|
205
|
|||||
7.52%
note payable to Baiyin Credit Union matures on August 15, 2009
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, guaranteed by Qianzhen Mining
|
117
|
110
|
|||||
10.21%
note payable to Baiyin Credit Union matures on November 22, 2008
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, guaranteed by Xiangzhen Mining
|
880
|
821
|
|||||
8.22%
note payable to Baiyin Credit Union matures on December 26, 2008
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, secured by the time deposit of Mr. Helin Cui, a director
of the
Company
|
88
|
82
|
|||||
10.46%
note payable to Baiyin Credit Union matures on November 15, 2008
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, guaranteed by Qianzhen Mining
|
220
|
|
|||||
10.46%
note payable to Baiyin Credit Union matures on November 15, 2008
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, guaranteed by Qianzhen Mining
|
103
|
|
|||||
9.86%
note payable to Baiyin Credit Union matures on December 27, 2008
with
interest due on the 20th day of each quarter and principal due
at date of
maturity, guaranteed by Qianzhen Mining
|
352
|
|
|||||
|
|
|
|||||
|
$
|
1,760
|
$
|
1,314
|
|
September 30,
2008
|
December 31,
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
Accrued
debt issuance costs (a)
|
53
|
116
|
|||||
Receipts
in advance
|
3,028
|
408
|
|||||
Accruals
for payroll, bonus and other operating expenses
|
635
|
892
|
|||||
Payables
for construction service vender
|
2,043
|
481
|
|||||
Payable
for extraction rights (b)
|
1,014
|
||||||
Others
payables
|
2,323
|
558
|
|||||
|
$
|
8,082
|
$
|
3,469
|
(a) |
The
balance mainly represents outstanding legal service fees payable
in
connection with the issuance of the convertible notes.
|
(b) |
Payable
for extraction rights of Xiangzhen has been paid to government in
the
third quarter of 2008.
|
|
September 30,
2008
|
December 31,
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
Due
to directors of the Company:
|
|||||||
Ms.
Xiao Jing Yu, CEO of the Company (a)
|
$
|
758
|
$
|
166
|
|||
Mr.
Xue Ming Xu, COO of the Company (b)
|
$
|
142
|
1
|
||||
Mr.
Cui He Lin , Director of the Company(c)
|
$
|
73
|
|||||
Due
to Wulatehouqi Mengxin Co., Ltd, the minority shareholder of
Xingzhen
Mining (d)
|
1,467
|
1,369
|
|||||
Due
to Mr. Xiao Ming Yu, General Manager of Xiangzhen
|
654
|
||||||
Due
to Xinjiang Tianxiang New Technology Development Co., Ltd, the
minority
shareholder of Xingzhen Mining (e)
|
526
|
||||||
|
$
|
3,094
|
$
|
2,062
|
(a)
|
Ms.Yu
is the CEO of the Company.
|
(b)
|
Mr.Xu
is the COO of the Company.
|
(c)
|
Mr.Cui
is a director of the Compay.
|
(d)
|
Wulatehouqi
Mengxin Co., Ltd is the minority shareholder of Xingzhen Mining.
|
(e)
|
Xinjiang
Tianxiang New Technology Development Co., Ltd is the minority shareholder
of Xingzhen Mining.
|
|
For the Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2008
|
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
Current:
|
|||||||
-
PRC
|
$
|
-
|
$
|
-
|
|||
|
|||||||
Deferred:
|
|||||||
-
PRC
|
129
|
32
|
|||||
|
$
|
129
|
$
|
32
|
|
China Income Tax Rate
|
|
Deferred Income Tax Assets
|
|
|||
as of September 30, 2008
|
|
from January 1, 2008
|
|
as of September 30, 2008
|
|
||
(In thousands)
|
|
%
|
|
(In thousands)
|
|
||
|
|
|
|
|
|
||
2,744
|
|
|
25
|
%
|
|
686
|
|
Fair Value in Acquisition
|
|
Kyrgyzstan Income Tax Rate
|
|
Deferred Tax Liabilities
|
|
||
(In thousands)
|
|
%
|
|
(In thousands)
|
|
||
|
|
|
|
|
|
||
12,010
|
|
|
10
|
%
|
|
1,201
|
|
Contracted
but not provided for at September 30, 2008:
|
||||
Purchase
of machinery - within one year
|
$
|
442
|
||
Acquisition
or construction of buildings-within one year
|
365
|
|||
|
$
|
807
|
Nine
months ended September 30, 2008
|
Fluorite
|
Nonferrous
metals
|
Consolidated
|
|||||||
Segment
revenue
|
2,178
|
2,667
|
4,845
|
|||||||
Inter-segment
revenue
|
||||||||||
Revenue
from external customers
|
2,178
|
2,667
|
4,845
|
|||||||
Segment
(loss) profit
|
(2,829
|
)
|
(2,221
|
)
|
(5,050
|
)
|
||||
Unallocated
corporate expenses
|
(2,667
|
)
|
||||||||
Income
from continuing operations before income taxes and minority
interests
|
(7,717
|
)
|
||||||||
Total
segment assets
|
51,200
|
58,028
|
109,228
|
|||||||
Inter-segment
receivables
|
(25,596
|
)
|
(23,967
|
)
|
(49,563
|
)
|
||||
25,604
|
34,061
|
59,665
|
||||||||
Deferred
debt issuance costs
|
1,859
|
|||||||||
Other
unallocated corporate assets
|
5
|
|||||||||
61,529
|
||||||||||
Other
segment information:
|
||||||||||
Depreciation
and amortization
|
1,951
|
1,337
|
3,288
|
|||||||
Expenditure
for segment assets
|
1,072
|
903
|
1,975
|
Nine
months ended September 30, 2007
|
Fluorite
|
Nonferrous
metals
|
Consolidated
|
|||||||
Segment
revenue
|
5,066
|
6,997
|
12,063
|
|||||||
Inter-segment
revenue
|
||||||||||
Revenue
from external customers
|
5,066
|
6,997
|
12,063
|
|||||||
Segment
(loss) profit
|
1,430
|
2,191
|
3,621
|
|||||||
Unallocated
corporate expenses
|
(3,228
|
)
|
||||||||
Income
from continuing operations before income taxes and minority
interests
|
393
|
|||||||||
Other
segment information:
|
||||||||||
Depreciation
and amortization
|
537
|
765
|
1,302
|
|||||||
Expenditure
for segment assets
|
8,300
|
7,119
|
15,419
|
Year
ended December 31, 2007
|
Fluorite
|
Nonferrous
metals
|
Consolidated
|
|||||||
Total
segment assets
|
45,673
|
52,503
|
98,176
|
|||||||
Inter-segment
receivables
|
(24,111
|
)
|
(18,711
|
)
|
(42,822
|
)
|
||||
21,562
|
33,792
|
55,354
|
||||||||
Deferred
debt issuance costs
|
2,170
|
|||||||||
Other
unallocated corporate assets
|
1,777
|
|||||||||
59,301
|
|
For the Nine Months Ended
September 30,
|
||||||
|
2008
|
2007
|
|||||
|
(In thousands)
|
(In thousands)
|
|||||
Exchange gain
|
$
|
646
|
$
|
224
|
|||
Donation
|
(43
|
)
|
(85
|
)
|
|||
Others
|
(13
|
)
|
7
|
||||
|
$
|
590
|
$
|
146
|
|
For
the Nine Months Ended
September 30,
|
||||||
|
2008
|
2007
|
|||||
|
(In thousands,
except per
share data)
|
(In thousands,
except
per
share data)
|
|||||
|
|
|
|||||
Income
(loss) from continuing operations available to common shareholders:
|
|||||||
Basic
and Diluted
|
$
|
(7,523
|
)
|
$
|
419
|
||
|
|||||||
Income
(loss) from discontinued operations available to common shareholders:
|
|||||||
Basic
and Diluted
|
$
|
-
|
$
|
(195
|
)
|
||
|
|||||||
Weighted
average number of shares:
|
|||||||
Basic
and Diluted
|
22,215
|
21,872
|
|||||
|
|||||||
Earnings
(loss) per share from continuing operations
|
|||||||
-
Basic and Diluted
|
$
|
(0.339
|
)
|
$
|
0.019
|
||
|
|||||||
Earnings
(loss) per share from discontinued operations
|
|||||||
-
Basic and Diluted
|
$
|
-
|
$
|
(0.009
|
)
|
|
|
Revenue
|
|
Percentage
|
|||
Number
|
Customer
|
(In
thousands)
|
|
(%)
|
|||
1
|
|
RuiPeng
Mining Ltd
|
$
|
1,493
|
|
|
31%
|
2
|
|
Inner
Mongolia Huadesanli Trading Ltd
|
|
775
|
|
|
16%
|
3
|
|
Laiwu
Steel Ltd
|
656
|
|
|
13%
|
|
4
|
|
Handang
Hongzhi Ltd
|
|
574
|
|
|
12%
|
TOTAL
|
|
|
$
|
3,498
|
|
|
72%
|
|
|
Revenue
|
|
Percentage
|
|||
Number
|
Customer
|
(In thousands)
|
|
(%)
|
|||
1
|
|
Bayannaoer
Zijin Nonferrous metals Ltd
|
$
|
3,432
|
|
|
29%
|
2
|
|
Baiyin
Nonferrous metals Ltd
|
|
3,047
|
|
|
25%
|
3
|
|
Ningxia
Jinhe chemistry Ltd
|
|
2,075
|
|
|
17%
|
TOTAL
|
|
|
$
|
8,554
|
|
|
71%
|
|
|
|
|
Receivables
|
|
Percentage
|
|
|||
Number
|
|
Customer
|
|
(In thousands)
|
|
(%)
|
|
|||
1
|
|
|
Handan
hongzhi Ltd
|
|
$
|
156
|
|
|
29
|
%
|
2
|
|
|
Laiwu
steel, Ltd
|
|
|
145
|
|
|
27
|
%
|
3
|
|
|
Yichen
Huawei Ltd
|
|
|
132
|
|
|
25
|
%
|
TOTAL
|
|
|
|
$
|
433
|
|
|
81
|
%
|
|
Method
|
|
Unit
|
|
Quantity
|
|
Geology
|
|
Mapping
and comprehensive study
|
|
-
|
|
-
|
|
|
Surface
scanning
|
|
km
2
|
|
15
|
Geophysical
|
|
Depth
measuring by induced polarization method
|
|
Point
|
|
50
|
prospecting
|
|
“Mise—a—la—masse”
method
|
|
km
2
|
|
1
|
|
|
TEM
|
|
km
2
|
|
1
|
Drilling
|
|
Inclined
hole
|
|
m
|
|
5000
|
Trenching
|
|
-
|
|
m
3
|
|
6000
|
Assaying
|
|
Sampling
and test
|
|
-
|
|
-
|
|
Unit
|
|
Quantity
|
|
Remark
|
|
Geology
|
|
Km
|
|
20
|
|
mapping
|
Trenching
|
|
M
3
|
|
400
|
|
|
Drilling
|
|
M
|
|
400
|
|
|
Assaying
|
|
P
iece
|
|
800
|
|
|
|
For the three months ended Sep
30,
|
||||||
|
2008
|
2007
|
|||||
|
(in thousands)
|
(in thousands)
|
|||||
|
|
|
|||||
Net
revenue
|
$
|
2,924
|
$
|
4,273
|
|||
Gross
profit
|
495
|
1,874
|
|||||
-
Gross profit margin
|
17
|
%
|
44
|
%
|
|||
General
and administrative expenses
|
2,550
|
1,640
|
|||||
Interest
expense
|
87
|
144
|
|||||
Net
income (loss)
|
$
|
(2,025
|
)
|
$
|
115
|
Segment
revenue
|
Segment
profit (loss)
|
||||||||||||
For the three months ended Sep
, 30
|
For the three months ended
Sep , 30
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
|
|
|
|
|
|||||||||
Fluorite
|
$
|
1,122
|
$
|
2,038
|
$
|
(1,214
|
)
|
$
|
691
|
||||
|
|
|
|
|
|||||||||
Nonferrous
metals
|
$
|
1,802
|
$
|
2,235
|
$
|
(613
|
)
|
$
|
(193
|
)
|
|
For the nine months ended Sep
30,
|
||||||
|
2008
|
2007
|
|||||
|
(in thousands)
|
(in thousands)
|
|||||
|
|
|
|||||
Net
revenue
|
$
|
4,845
|
$
|
12,063
|
|||
Gross
profit
|
639
|
6,836
|
|||||
-
Gross profit margin
|
13
|
%
|
57
|
%
|
|||
General
and administrative expenses
|
6,942
|
3,893
|
|||||
Interest
expense
|
1,932
|
2,489
|
|||||
Net
income (loss)
|
$
|
(7,523
|
)
|
$
|
224
|
Segment
revenue
|
Segment
profit (loss)
|
||||||||||||
For the nine months ended
September
, 30
|
For the nine months ended
September
, 30
|
||||||||||||
(amounts
in thousand)
|
2008
|
2007
|
2008
|
2007
|
|||||||||
|
|
|
|
|
|||||||||
Fluorite
|
$
|
2,178
|
$
|
5,066
|
$
|
(2,829
|
)
|
$
|
1,430
|
||||
|
|
|
|
|
|||||||||
Nonferrous
metals
|
$
|
2,667
|
$
|
6,997
|
$
|
(2,221
|
)
|
$
|
2,191
|
Level
1
|
—
quoted prices (unadjusted) in active markets for identical asset or
liabilities that the Company has the ability to access as of the
measurement date. Financial assets and liabilities utilizing Level
1
inputs include active exchange-traded securities and exchange-based
derivatives.
|
|
|
Level
2
|
—
inputs other than quoted prices included within Level 1 that are
directly
observable for the asset or liability or indirectly observable
through
corroboration with observable market data. Financial assets and
liabilities utilizing Level 2 inputs include fixed income securities,
non-exchange-based derivatives, mutual funds, and fair-value hedges.
|
Level
3
|
—
unobservable inputs for the asset or liability only used when there
is
little, if any, market activity for the asset or liability at the
measurement date. Financial assets and liabilities utilizing Level
3
inputs include infrequently-traded,non-exchange-based derivatives
and
commingled investment funds, and are measured using present value
pricing
models.
|
(In
thousands)
As
of September 30,
|
Fair
Value
|
||||||||||||
2008
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||
Warrants
liability
|
$
|
—
|
$
|
116
|
$
|
—
|
$
|
116
|
Balance
of warrants liability at December 31, 2007
|
$
|
1,100
|
||
Gain
on fair value adjustments to warrants liability
|
(984
|
)
|
||
Balance
at September 30, 2008
|
$
|
116
|
Number
|
|
Description
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer under Section 302 of the Sarbanes-Oxley
Act of
2002.
|
|
|
|
31.2
|
|
Certification
of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
|
32
|
|
Certifications
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350
|
CHINA
SHEN ZHOU MINING & RESOURCES, INC.
|
||
|
|
|
Date: November 13, 2008 | By: | /s/ Xiaojing Yu |
Xiaojing
Yu, Chief Executive Officer
|
||
(Principal Executive Officer) |
Date: November 13, 2008 | By: | /s/ Hu Ye |
Hu Ye, Chief Financial Officer |
||
(Principal Financial Officer and Principal Accounting Officer) |