China Shen Zhou Reports Record 2011 Fourth Quarter And Fiscal Year Revenues

BEIJING, March 28, 2012 /PRNewswire-Asia-FirstCall/ -- China Shen Zhou Mining & Resources, Inc. ("China Shen Zhou" or the "Company") (NYSE AMEX: 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
min.liu@grayling.com