News

CHNR released results of operations for the year ended December 31, 2008

CONTACT
Edward Wong, Chief Financial officer
011-852-2810-7205 or cfo@chnr.net

FOR IMMEDIATE RELEASE

CHINA NATURAL RESOURCES RELEASES
2008 ANNUAL RESULTS OF OPERATIONS

HONG KONG, June 29, 2008 – 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, 2008 (derived from the Company’s audited financial statements) as follows.

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(Amounts in thousands, except share and per share data)




Year  Ended December 31,





2006


2007


2008


2008





RMB


RMB


RMB


US$


NET SALES















Related parties








379,114



55,526


Others




145,389



125,963



466,970



68,394






145,389



125,963



846,084



123,920


COST OF SALES















Related parties








(363,938

)


(53,303

)

Others




(36,787

)


(38,541

)


(426,920

)


(62,528

)





(36,787

)


(38,541

)


(790,858

)


(115,831

)

GROSS PROFIT




108,602



87,422



55,226



8,089


SELLING, GENERAL AND















ADMINISTRATIVE EXPENSES,
including share-based compensation expense
of nil in 2006, RMB38,998 (US$5,712)
in 2007, and RMB26,016 (US$3,810)
in 2008




(14,170

)


(52,499

)


(78,712

)


(11,530

)
















INCOME (LOSS) FROM OPERATIONS




94,432



34,923



(23,486

)


(3,441

)
















OTHER INCOME (EXPENSE)















Interest income




904



4,520



4,265



625


Interest expense, related party








(1,835

)


(269

)

Loss attributable to investment















in unconsolidated investees






(2,145

)


(9,691

)


(1,419

)

Net gain on derivative assets








25,834



3,784


Gain on sale of investment in subsidiary








78,877



11,553


Other




4,929



(512

)


10,465



1,532






5,833



1,863



107,915



15,806


INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES




100,265



36,786



84,429



12,365

















INCOME TAX EXPENSE




(15,157

)


(12,051

)


(8,402

)


(1,231

)
















INCOME FROM CONTINUING
OPERATIONS




85,108



24,735



76,027



11,134

















DISCONTINUED OPERATIONS















Loss from discontinued advertising and
HARC operations, net of taxes of nil




(659

)






















Loss on disposal of discontinued operations,
net of taxes of nil




(11,901

)






















LOSS FROM DISCONTINUED OPERATIONS




(12,560

)






















NET INCOME




72,548



24,735



76,027



11,134


NET INCOME (LOSS) PER SHARE:














Basic














Income from continuing operations



7.46



1.86



3.94



0.58


Loss from discontinued operations



(1.10

)







Net income per share



6.36



1.86



3.94



0.58






























NET INCOME (LOSS) PER SHARE:














Diluted














Income from continuing operations



6.17



1.43



3.41



0.50


Loss from discontinued operations



(0.91

)







Net income per share



5.26



1.43



3.41



0.50
















WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:




























Basic



11,402,372



13,290,471



19,276,019



19,276,019


Diluted



13,798,731



17,347,024



22,278,600



22,278,600



CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2007 AND 2008

(Amounts in thousands, except share data)

ASSETS




December 31,





2007


2008


2008





RMB


RMB


US$


CURRENT ASSETS












Cash




483,689



120,888



17,706


Trade receivables:












Related parties






70,830



10,374


Others




1,525



4,157



609


Bills receivable




13,000



1,460



214


Inventories




4,633



66,245



9,702


Note receivable







96,166



14,085


Deferred tax assets






4,425



648


Other assets




10,967



25,061



3,670














TOTAL CURRENT ASSETS




513,814



389,232



57,008














Property and equipment, net




37,772



242,463



35,512


Deposits for business acquisitions and other






119,741



17,537


Investment in unconsolidated investees




30,495



22,210



3,253


Advances to unconsolidated investee, net






39,290



5,754














TOTAL ASSETS




582,081



812,936



119,064


LIABILITIES AND SHAREHOLDERS’ EQUITY





December 31,






2007


2008


2008




Notes


RMB


RMB


US$


CURRENT LIABILITIES













Accounts payable





991



7,361



1,078


Other payables


8



24,355



25,484



3,732


Advances from customers





2,169



15,261



2,235


Accrued liabilities





3,367



8,014



1,174


Related party payables


11



2,221



18,316



2,683


Income tax and other taxes payable


10



5,593



11,341



1,661


Current portion of related party capital lease obligation


11





9,977



1,461















TOTAL CURRENT LIABILITIES





38,696



95,754



14,024















Related party capital lease obligation, net of current portion


11





10,780



1,579


Other payables


8



8,312



10,087



1,477







8,312



20,867



3,056















TOTAL LIABILITIES





47,008



116,621



17,080















MINORITY INTEREST







13,919



2,039















SHAREHOLDERS’ EQUITY













Preferred Shares, no par;
Authorized – 10,000,000 shares;
issued and outstanding –none










Common shares, no par:
Authorized – 200,000,000 shares;
issued and outstanding –17,323,416 and 19,623,416
shares at December 31, 2007 and 2008, respectively





312,081



312,081



45,708


Reserves





7,331



7,331



1,074


Additional paid in capital





127,707



228,752



33,503


Retained earnings





100,915



176,942



25,915


Excess of Mark Faith purchase price over net asset value


3





(7,149

)


(1,047

)

Other comprehensive loss





(12,961

)


(35,561

)


(5,208

)



























TOTAL SHAREHOLDERS’ EQUITY





535,073



682,396



99,945















TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY





582,081



812,936



119,064



The consolidated statements of operations for the years ended December 31, 2006, 2007 and 2008 and the consolidated balance sheets as of December 31, 2007 and 2008 have been prepared in accordance with generally accepted accounting principles in the United States, are derived from, and should be read in conjunction with, the Company’s consolidated financial statements for the years ended December 31, 2006, 2007 and 2008, as filed with the Securities and Exchange Commission on June 29, 2008 under cover of Form 20-F.


For the convenience of the reader, amounts in Renminbi (“RMB”) have been translated into United States dollars (“US$”) at the rate of US$1.00=RMB6.8277 quoted by Bloomberg Finance L.P. on December 31, 2008. The RMB is not freely convertible into foreign currencies and no representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate, or at all.


Mr. Li Feilie, the Company's Chairman, commented on the results: "China Natural Resources recorded total sales revenue of RMB846.1 million (US$123.9 million) in 2008, a surge of 571.7% from a year earlier. This represents principally the contribution from our copper smelting business. The Company achieved net income of RMB76.0 million (US$11.1 million) in 2008, representing an increase of over 200% from a year earlier. This was attributable to the disposition of a 40% equity interest in our copper smelting business. The disposition was made to strengthen the Company’s working capital so that the Company is better able to focus on the development of its upstream coal and nonferrous metal businesses. In January 2009, we completed the acquisition of a 70% interest of a coal mining asset in Guizhou Province, the PRC. The operating environment for 2009 will remain difficult. Although market conditions are weak, there are signs of recovery in the PRC economy as the PRC government’s economic stimulus package, introduced in November 2008, is starting to bear fruit. Despite the continuing impact of the global financial crisis, we will continue our strategy of acquiring coal resources and non-ferrous/ iron metal assets."


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.