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.