6-K 1 chnr_6k.htm REPORT OF FOREIGN PRIVATE ISSUER REPORT OF FOREIGN PRIVATE ISSUER


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 6-K


REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934


For the month of December 2014.


Commission File Number 0-26046


China Natural Resources, Inc.

(Translation of registrant's name into English)


Room 2205, 22/F, West Tower, Shun Tak Centre,

168-200 Connaught Road Central, Sheung Wan, Hong Kong

(Address of principal executive offices)



Indicate by check mark whether the registrant files of will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F þ Form 40-F ¨


Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨


Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨





 





Unaudited Results of Operations


Furnished herewith on behalf of China Natural Resources, Inc. are the following:


(a) 

 Unaudited Financial Statements:


-

Condensed Consolidated Statements Of Comprehensive Income (Unaudited) For The Three and Six Months Ended June 30, 2014 and 2013


-

Condensed Consolidated Statements Of Financial Position as of June 30, 2014 (Unaudited) and December 31, 2013


-

Condensed Consolidated Statements Of Cash Flows (Unaudited) For The Six Months Ended June 30, 2014 and 2013


-

Notes to Condensed Consolidated Financial Statements (Unaudited)


(b) 

Management's Discussion and Analysis of Financial Condition and Results of Operations


The press release furnished herewith as Exhibit 99.1 shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, and is not incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.


Exhibits


99.1

Press Release dated December 4, 2014.




 



2 / 14




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

CHINA NATURAL RESOURCES, INC.

 

 

 

 

Date: December 4, 2014

By:

/s/ Li Feilie

 

 

 

Li Feilie

 

 

 

Chairman and Chief Executive Officer

 











3 / 14



 

CHINA NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013

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


 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2013

 

 

2014

 

 

2014

 

 

2013

 

 

2014

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONTINUING OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

11,791

 

 

 

4,684

 

 

 

755

 

 

 

15,839

 

 

 

7,896

 

 

 

1,273

 

COST OF SALES

 

 

(7,933

)

 

 

(3,765

)

 

 

(607

)

 

 

(11,475

)

 

 

(6,028

)

 

 

(972

)

GROSS PROFIT

 

 

3,858

 

 

 

919

 

 

 

148

 

 

 

4,364

 

 

 

1,868

 

 

 

301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELLING AND DISTRIBUTION EXPENSES

 

 

(27

)

 

 

(21

)

 

 

(3

)

 

 

(63

)

 

 

(50

)

 

 

(8

)

ADMINISTRATIVE EXPENSES

 

 

(4,344

)

 

 

(2,610

)

 

 

(421

)

 

 

(8,519

)

 

 

(5,642

)

 

 

(910

)

IMPAIRMENT LOSS ON PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

(7,366

)

 

 

(1,187

)

 

 

 

 

 

(7,366

)

 

 

(1,187

)

OTHER OPERATING (EXPENSES)/INCOME, NET

 

 

158

 

 

 

13

 

 

 

2

 

 

 

(1,492

)

 

 

293

 

 

 

47

 

OPERATING LOSS

 

 

(355

)

 

 

(9,065

)

 

 

(1,461

)

 

 

(5,710

)

 

 

(10,897

)

 

 

(1,757

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(90

)

 

 

(97

)

 

 

(16

)

 

 

(180

)

 

 

(194

)

 

 

(31

)

INTEREST INCOME

 

 

467

 

 

 

422

 

 

 

68

 

 

 

800

 

 

 

890

 

 

 

143

 

PROFIT/ (LOSS) BEFORE INCOME TAXES

 

 

22

 

 

 

(8,740

)

 

 

(1,409

)

 

 

(5,090

)

 

 

(10,201

)

 

 

(1,645

)

INCOME TAXES EXPENSE (Note 7)

 

 

(252

)

 

 

(106

)

 

 

(17

)

 

 

(385

)

 

 

(256

)

 

 

(41

)

LOSS FOR THE PERIOD FROM CONTINUING OPERATIONS

 

 

(230

)

 

 

(8,846

)

 

 

(1,426

)

 

 

(5,475

)

 

 

(10,457

)

 

 

(1,686

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period from discontinued operations, net of tax

 

 

(58,156

)

 

 

 

 

 

 

 

 

(222,756

)

 

 

(10,708

)

 

 

(1,726

)

LOSS FOR THE PERIOD

 

 

(58,386

)

 

 

(8,846

)

 

 

(1,426

)

 

 

(228,231

)

 

 

(21,165

)

 

 

(3,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owners of the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

(230

)

 

 

(8,846

)

 

 

(1,426

)

 

 

(5,475

)

 

 

(10,457

)

 

 

(1,686

)

From discontinued operations

 

 

(56,610

)

 

 

 

 

 

 

 

 

(221,947

)

 

 

(9,925

)

 

 

(1,600

)

Non-controlling interests

 

 

(1,546

)

 

 

 

 

 

 

 

 

(809

)

 

 

(783

)

 

 

(126

)

 

 

 

(58,386

)

 

 

(8,846

)

 

 

(1,426

)

 

 

(228,231

)

 

 

(21,165

)

 

 

(3,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSSES PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- For loss from continuing operations

 

 

(0.01

)

 

 

(0.36

)

 

 

(0.06

)

 

 

(0.22

)

 

 

(0.42

)

 

 

(0.07

)

- For loss from discontinued operations

 

 

(2.27

)

 

 

 

 

 

 

 

 

(8.91

)

 

 

(0.40

)

 

 

(0.06

)

- Net loss per share

 

 

(2.28

)

 

 

(0.36

)

 

 

(0.06

)

 

 

(9.13

)

 

 

(0.82

)

 

 

(0.13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- For loss from continuing operations

 

 

(0.01

)

 

 

(0.36

)

 

 

(0.06

)

 

 

(0.22

)

 

 

(0.42

)

 

 

(0.07

)

- For loss from discontinued operations

 

 

(2.27

)

 

 

 

 

 

 

 

 

(8.91

)

 

 

(0.40

)

 

 

(0.06

)

- Net loss per share

 

 

(2.28

)

 

 

(0.36

)

 

 

(0.06

)

 

 

(9.13

)

 

 

(0.82

)

 

 

(0.13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FOR THE PERIOD

 

 

(58,386

)

 

 

(8,846

)

 

 

(1,426

)

 

 

(228,231

)

 

 

(21,165

)

 

 

(3,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/ (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items to be classified to profit or loss in subsequent period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

2,475

 

 

 

1,221

 

 

 

197

 

 

 

3,845

 

 

 

(3,410

)

 

 

(550

)

TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)

 

 

2,475

 

 

 

1,221

 

 

 

197

 

 

 

3,845

 

 

 

(3,410

)

 

 

(550

)

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD, NET OF TAX

 

 

(55,911

)

 

 

(7,625

)

 

 

(1,229

)

 

 

(224,386

)

 

 

(24,575

)

 

 

(3,962

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owners of the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

2,139

 

 

 

(7,625

)

 

 

(1,229

)

 

 

(1,785

)

 

 

(13,882

)

 

 

(2,236

)

From discontinued operations

 

 

(56,504

)

 

 

 

 

 

 

 

 

(221,792

)

 

 

(9,910

)

 

 

(1,600

)

Non-controlling interests

 

 

(1,546

)

 

 

 

 

 

 

 

 

(809

)

 

 

(783

)

 

 

(126

)

 

 

 

(55,911

)

 

 

(7,625

)

 

 

(1,229

)

 

 

(224,386

)

 

 

(24,575

)

 

 

(3,962

)


See notes to condensed consolidated financial statements




4 / 14



 

CHINA NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2014 AND DECEMBER 31, 2013

(Amounts in thousands)


 

 

 

 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

 

 

 

2013

 

 

2014

 

 

2014

 

 

 

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

Notes

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

5

 

 

 

21,488

 

 

 

14,372

 

 

 

2,317

 

Rehabilitation fund

 

 

 

 

 

 

3,248

 

 

 

3,839

 

 

 

619

 

Prepayments

 

 

 

 

 

 

1,081

 

 

 

690

 

 

 

111

 

Deferred tax assets

 

 

 

 

 

 

1,536

 

 

 

1,572

 

 

 

253

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON-CURRENT ASSETS

 

 

 

 

 

 

27,353

 

 

 

20,473

 

 

 

3,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventories

 

4

 

 

 

4,727

 

 

 

10,602

 

 

 

1,709

 

Trade and bill receivables

 

 

 

 

 

 

5,500

 

 

 

5,300

 

 

 

854

 

Prepayments

 

 

 

 

 

 

 

 

 

143

 

 

 

23

 

Other receivables

 

 

 

 

 

 

74

 

 

 

326

 

 

 

53

 

Due from a related party

 

6

 

 

 

 

 

 

131,000

 

 

 

21,118

 

Term deposits with an original maturity over three months

 

 

 

 

 

 

3,758

 

 

 

3,699

 

 

 

596

 

Cash and cash equivalents

 

 

 

 

 

 

76,591

 

 

 

55,082

 

 

 

8,880

 

 

 

 

 

 

 

 

90,650

 

 

 

206,152

 

 

 

33,233

 

Assets classified as held for distribution

 

2

 

 

 

2,906,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

 

 

 

 

 

2,997,211

 

 

 

206,152

 

 

 

33,233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

 

 

 

3,024,564

 

 

 

226,625

 

 

 

36,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade and bills payables

 

 

 

 

 

 

944

 

 

 

971

 

 

 

156

 

Other payables and accrued liabilities

 

 

 

 

 

 

19,837

 

 

 

14,968

 

 

 

2,413

 

Due to related companies

 

6

 

 

 

6,453

 

 

 

6,566

 

 

 

1,059

 

Taxes payable

 

 

 

 

 

 

20,725

 

 

 

19,012

 

 

 

3,064

 

 

 

 

 

 

 

 

47,959

 

 

 

41,517

 

 

 

6,692

 

Liabilities directly associated with the assets classified as held for distribution

 

2

 

 

 

2,520,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

 

 

 

 

2,568,144

 

 

 

41,517

 

 

 

6,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to the Shareholder

 

6

 

 

 

197,062

 

 

 

135,736

 

 

 

21,882

 

Asset retirement obligations

 

 

 

 

 

 

3,840

 

 

 

4,030

 

 

 

650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON-CURRENT LIABILITIES

 

 

 

 

 

 

200,902

 

 

 

139,766

 

 

 

22,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

 

 

 

 

2,769,046

 

 

 

181,283

 

 

 

29,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

 

 

 

 

 

312,081

 

 

 

312,081

 

 

 

50,310

 

Other capital reserves

 

 

 

 

 

 

577,892

 

 

 

636,959

 

 

 

102,684

 

Reserves

 

 

 

 

 

 

53,059

 

 

 

49,019

 

 

 

7,902

 

Accumulated losses

 

 

 

 

 

 

(781,671

)

 

 

(948,167

)

 

 

(152,853

)

Other comprehensive losses

 

 

 

 

 

 

634

 

 

 

(4,550

)

 

 

(734

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY

 

 

 

 

 

 

161,995

 

 

 

45,342

 

 

 

7,309

 

NON-CONTROLLING INTERESTS

 

 

 

 

 

 

93,523

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

 

 

 

 

255,518

 

 

 

45,342

 

 

 

7,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

 

 

 

 

 

3,024,564

 

 

 

226,625

 

 

 

36,533

 


See notes to condensed consolidated financial statements.

 



5 / 14




CHINA NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(Amounts in thousands)


 

 

Six months ended

June 30,

 

 

 

2013

 

 

2014

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

NET CASH FLOWS USED IN OPERATING ACTIVITIES

 

 

(132,733

)

 

 

(13,042

)

 

 

(2,103

)

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of items of property, plant and equipment

 

 

(129,245

)

 

 

(2,965

)

 

 

(478

)

Prepayment for purchase of land use rights

 

 

(10,859

)

 

 

 

 

 

 

Term deposits with original maturity over three months

 

 

19,951

 

 

 

59

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET CASH FLOWS USED IN INVESTING ACTIVITIES

 

 

(120,153

)

 

 

(2,906

)

 

 

(468

)

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Repayments of interest bearing bank and other borrowings

 

 

(175,000

)

 

 

 

 

 

 

Proceeds from interest bearing bank and other borrowings

 

 

918,600

 

 

 

 

 

 

 

Repayment to related companies

 

 

(2,091,105

)

 

 

(6,244

)

 

 

(1,007

)

Decrease of restricted bank deposit

 

 

7,082

 

 

 

 

 

 

 

Advances from related companies

 

 

1,681,287

 

 

 

113

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES

 

 

340,864

 

 

 

(6,131

)

 

 

(988

)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

87,978

 

 

 

(22,079

)

 

 

(3,559

)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET FOREIGN EXCHANGE DIFFERENCE

 

 

(389

)

 

 

570

 

 

 

92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

210,944

 

 

 

76,591

 

 

 

12,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

 

298,533

 

 

 

55,082

 

 

 

8,880

 


See notes to condensed consolidated financial statements.


 



6 / 14




CHINA NATURAL RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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


1. BASIS OF PRESENTATION


On January 22, 2014, the Company completed a spin-off of the coal business held by Feishang Anthracite Resources Limited ("Feishang Anthracite," formerly known as Wealthy Year Limited) by the distribution of CHNR's 100% equity interest in Feishang Anthracite, on a pro rata basis to all its shareholders (the "Distribution" or "Spin-off"). On the effective date of the Distribution, the Company also completed the listing of the shares of Feishang Anthracite by introduction on the Main Board of The Stock Exchange of The Hong Kong Limited ("Hong Kong Stock Exchange") (Note 2).


Management has prepared the accompanying unaudited condensed consolidated financial statements for the three-month and six-month periods ended June 30, 2014. These operating results are not necessarily indicative of the results that may be expected for the year ended December 31, 2014.


The condensed consolidated statements of financial position at December 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by International Financial Reporting Standards ("IFRS") for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 20-F for the year ended December 31, 2013.


The consolidated financial statements include the accounts of China Natural Resources, Inc. and those subsidiaries in which the Company has direct or indirect controlling interests (collectively referred to as the "Company"). The Company's subsidiaries as of December 31, 2013 (after giving effect to the Spin-Off), are as described in the Company's Form 20-F for the year ended December 31, 2013.


For the convenience of readers, amounts in Renminbi, the Chinese currency ("CNY"), have been translated into United States dollars ("US$") at the applicable rate of US$1.00 = CNY6.2031 as quoted by Bloomberg Finance L.P. as of June 30, 2014, except as disclosed otherwise. No representation is made that the CNY amounts could have been, or could be, converted into US$ at that rate, or at all.


2. DISCONTINUED OPERATIONS


On December 31, 2013, the Company announced that its board of directors had approved the Spin-Off and listing by way of introduction on the Hong Kong Stock Exchange of its wholly-owned subsidiary, Feishang Anthracite, which, at the time, operated the Company's coal mining and related businesses. The Spin-Off was effected by way of a distribution in specie by the Company of all of Feishang Anthracite's issued and outstanding ordinary shares at par value of HK$0.01 per share ("Ordinary Shares"), to the holders of the Company's common shares ("Common Shares") on a pro rata basis. On January 22, 2014, the Company completed the Spin-Off and listing by way of introduction on the Hong Kong Stock Exchange of Feishang Anthracite. Since the effective date of the Spin-Off, the Company has not operated any coal mining business and continues operating its non-ferrous metals mining and related businesses.

 

The results of Feishang Anthracite for the periods indicated are presented below:


 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

One Month Ended

January 31,

 

 

 

2013

 

 

2013

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

CNY

 

Revenue

 

 

29,477

 

 

 

54,716

 

 

 

21,157

 

Cost of sales

 

 

(24,004

)

 

 

(39,953

)

 

 

(10,399

)

Gross profit

 

 

5,473

 

 

 

14,763

 

 

 

10,758

 

Selling and distribution expenses

 

 

(1,336

)

 

 

(2,728

)

 

 

(506

)

Administrative expense

 

 

(37,746

)

 

 

(57,423

)

 

 

(8,633

)

Impairment loss on property, plant and equipment

 

 

 

 

 

(184,417

)

 

 

 

Other operating expenses

 

 

(1,918

)

 

 

(1,880

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING (LOSS)/INCOME

 

 

(35,527

)

 

 

(231,685

)

 

 

1,619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance costs

 

 

(31,812

)

 

 

(43,731

)

 

 

(11,571

)

Interest income

 

 

870

 

 

 

977

 

 

 

86

 

Non-operating income/(expense), net

 

 

1,613

 

 

 

1,215

 

 

 

(100

)

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAX

 

 

(64,856

)

 

 

(273,224

)

 

 

(9,966

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (expense)/benefit

 

 

6,700

 

 

 

50,468

 

 

 

(742

)

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FOR THE PERIOD FROM THE DISCONTINUED OPERATION

 

 

(58,156

)

 

 

(222,756

)

 

 

(10,708

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

Owners of the company

 

 

(56,610

)

 

 

(221,947

)

 

 

(9,925

)

Non-controlling Interests

 

 

(1,546

)

 

 

(809

)

 

 

(783

)

 

 

 

(58,156

)

 

 

(222,756

)

 

 

(10,708

)

 



7 / 14




The major classes of assets and liabilities after elimination of intra-group balances of Feishang Anthracite as at December 31, 2013 and January 31, 2014 are as follows:


 

 

December 31,

 

 

January 31,

 

 

 

2013

 

 

2014

 

 

 

CNY

 

 

CNY

 

ASSETS

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Property, plant and equipment

 

 

2,461,963

 

 

 

2,460,311

 

Rehabilitation fund

 

 

37,350

 

 

 

33,380

 

Prepayments, deposits and other receivables

 

 

100,658

 

 

 

112,422

 

Deferred tax assets

 

 

9,830

 

 

 

41,516

 

 

 

 

2,609,801

 

 

 

2,647,629

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Inventories

 

 

14,363

 

 

 

16,844

 

Trade and bills receivables

 

 

68,059

 

 

 

55,670

 

Corporate income tax refundable

 

 

12,007

 

 

 

12,417

 

Prepayments, deposits and other receivables

 

 

30,584

 

 

 

41,308

 

Pledged and restricted bank deposits

 

 

24,864

 

 

 

26,142

 

Cash and cash equivalents

 

 

146,883

 

 

 

96,811

 

 

 

 

296,760

 

 

 

249,192

 

Total assets classified as held for distribution

 

 

2,906,561

 

 

 

2,896,821

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Trade and bills payables

 

 

143,246

 

 

 

104,957

 

Other payables and accrued liabilities

 

 

117,315

 

 

 

80,472

 

Interest-bearing bank and other borrowings

 

 

1,018,550

 

 

 

1,018,550

 

Interest payable

 

 

15,102

 

 

 

24,283

 

Income tax payable

 

 

879

 

 

 

10,610

 

Mining rights payables

 

 

38,875

 

 

 

28,168

 

 

 

 

1,333,967

 

 

 

1,267,040

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Interest-bearing bank and other borrowings

 

 

889,504

 

 

 

924,799

 

Interest payable

 

 

16,729

 

 

 

17,028

 

Deferred tax liabilities

 

 

216,320

 

 

 

248,569

 

Mining rights payables

 

 

55,443

 

 

 

55,443

 

Asset retirement obligations

 

 

8,222

 

 

 

8,289

 

TOTAL NON-CURRENT LIABILITIES

 

 

1,186,218

 

 

 

1,254,128

 

Total liabilities directly associated with the assets classified as held for distribution

 

 

2,520,185

 

 

 

2,521,168

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

 

386,376

 

 

 

375,653

 

 

The net cash flows incurred by Feishang Anthracite are as follows:


 

 

Three Months Ended

June 30,

2013

 

 

Six Months Ended

June 30,

2013

 

 

One Month Ended

January 31,

2014

 

 

 

CNY

 

 

CNY

 

 

CNY

 

Operating activities

 

 

(89,434

)

 

 

(124,509

)

 

 

(29,603

)

Investing activities

 

 

(52,553

)

 

 

(119,313

)

 

 

(54,472

)

Financing activities

 

 

171,643

 

 

 

223,397

 

 

 

34,018

 

Net cash (outflow)/inflow

 

 

29,656

 

 

 

(20,425

)

 

 

(50,057

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses per share (CNY):

 

 

 

 

 

 

 

 

 

 

 

 

Basic, from the discontinued operation

 

 

(2.27

)

 

 

(8.91

)

 

 

(0.40

)

Diluted, from the discontinued operation

 

 

(2.27

)

 

 

(8.91

)

 

 

(0.40

)



8 / 14




The calculations of basic and diluted earnings per share from discontinued operation are based on:


 

 

Three Months Ended

June 30,

2013

 

 

Six Months Ended

June 30,

2013

 

 

One Month Ended

January 31,

2014

 

 

 

CNY

 

 

CNY

 

 

CNY

 

Losses for the period attributable to owners of the Company from discontinued operation

 

 

(56,610

)

 

 

(221,947

)

 

 

(9,925

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Common Shares in issue during the period used in the basic earnings per share calculation

 

 

24,910,916

 

 

 

24,910,916

 

 

 

24,910,916

 

Weighted average number of Common Shares used in the diluted earnings per share calculation

 

 

24,910,916

 

 

 

24,910,916

 

 

 

24,910,916

 


3. LOSSES PER SHARE


Basic losses per share amounts are calculated using the weighted average number of Common Shares outstanding during the period. The Company did not have any potentially diluted shares through the six months ended June 30, 2013 and 2014. Accordingly, the diluted losses per share amounts are the same as the basic loss per share amounts.


4. INVENTORIES


 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

2013

 

 

2014

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

Raw materials

 

 

4,171

 

 

 

5,538

 

 

 

893

 

Finished goods

 

 

556

 

 

 

5,064

 

 

 

816

 

 

 

 

4,727

 

 

 

10,602

 

 

 

1,709

 

 

5. PROPERTY AND EQUIPMENT, NET

 

 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

2013

 

 

2014

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

US$

 

At cost:

 

 

 

 

 

 

 

 

 

Buildings

 

 

23,730

 

 

 

23,748

 

 

 

3,828

 

Mining structures and mining rights

 

 

25,465

 

 

 

25,988

 

 

 

4,190

 

Machinery and equipment

 

 

6,265

 

 

 

6,317

 

 

 

1,018

 

Motor vehicles

 

 

2,589

 

 

 

2,589

 

 

 

418

 

Construction in progress

 

 

 

 

 

1,763

 

 

 

284

 

Accumulated depreciation, depletion and amortization

 

 

(36,561

)

 

 

(38,667

)

 

 

(6,233

)

Impairment

 

 

 

 

 

(7,366

)

 

 

(1,187

)

 

 

 

21,488

 

 

 

14,372

 

 

 

2,317

 


An impairment loss on property, plant and equipment of CNY7.37 million (US$1.19 million) was recorded for the six months ended June 30, 2014 in connection with the price decline of iron concentrates. The carrying value of the long-term mining related assets was compared to the recoverable amount of the CGU, which was based predominantly on the value-in-use ("VIU") approach. VIU calculations use pre-tax cash flow projections. Other key assumptions applied in the impairment tests include the production volume, expected iron price, product cost and related expenses. Management determined that these key assumptions were based on past performance and their expectations on market development. Further, the Group adopted an after-tax rate of 12.00% that reflects specific risks related to CGU as discount rates.




9 / 14




6. RELATED PARTY BALANCES AND TRANSACTIONS


In addition to the transactions detailed elsewhere in these financial statements, the Company had the following transactions with related parties during the period.


(a)

Commercial transactions with a related company are summarized as follows:

 

 

 

Six months ended

June 30,

 

 

 

2013

 

 

2014

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

CHNR's share of office rental to Anka Consultants Limited ("Anka")

 

 

756

 

 

 

435

 

 

 

70

 

 

 

 

756

 

 

 

435

 

 

 

70

 


Before September 2013, the Company and Anka, a private Hong Kong company that is owned by certain former directors of the Company, entered into office sharing agreement ("Original Office Sharing Agreement"), whereby the Company's head office in Hong Kong is shared on an equal basis between the two parties. The Original Office Sharing Agreement also provides that the Company and Anka shall share certain costs and expenses in connection with its use of the office, in addition to some of the accounting and secretarial services and day-to-day office administration provided by Anka. The Original Office Sharing Agreement ended on August 31, 2013.


On September 1, 2013, the Company and Feishang Anthracite entered into separate office sharing agreements with Anka ("New Office Sharing Agreements"). Pursuant to the New Office Sharing Agreements, the office premises of 238 square meters are shared by the Company, Feishang Anthracite and Anka on equal basis. The New Office Sharing Agreements also provides that the Company, Feishang Anthracite and Anka shall share certain costs and expenses in connection with their use of the office, in addition to some of the accounting and secretarial services and day-to-day office administration provided by Anka.


(b)

Receivable from and payables with related companies


The Company's payables with related companies are unsecured, non-interest bearing and due on demand, except to payables due to the Shareholder. The receivables and payables are summarized as follows:

 

 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

2013

 

 

2014

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

US$

 

Receivable from related companies:

 

 

 

 

 

 

 

 

 

Guizhou Puxin Energy Co. Ltd ("Guizhou Puxin")

 

 

 

 

 

131,000

 

 

 

21,118

 

 

 

 

 

 

 

131,000

 

 

 

21,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payables to related companies:

 

 

 

 

 

 

 

 

 

Wuhu Feishang Non-Metal Material Co. Ltd. ("WFNM")

 

 

 

 

 

113

 

 

 

18

 

Feishang Enterprise Group Limited ("Feishang Enterprise")

 

 

6,453

 

 

 

6,453

 

 

 

1,041

 

 

 

 

6,453

 

 

 

6,566

 

 

 

1,059

 

Long-term payable to the Shareholder:

 

 

 

 

 

 

 

 

 

 

 

 

Feishang Group Limited

 

 

197,062

 

 

 

135,736

 

 

 

21,882

 


7. INCOME TAX EXPENSE


Effective from January 1, 2008, the PRC's statutory corporate income tax ("CIT") rate is 25%. The Company's PRC subsidiaries are subject to income tax at 25% on their respective taxable incomes as calculated in accordance with the CIT Law and its relevant regulations.


8. SUBSEQUENT EVENTS


The Company has no material subsequent events from June 30, 2014.



10 / 14



 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS


The following discussion includes statements that constitute "forward-looking statements" within the meaning of Federal securities laws. These statements include, without limitation, statements regarding the intent, belief and current expectations of management with respect to the Company's policies regarding acquisitions, investments, dispositions, financings, conflicts of interest and other business matters; and trends affecting the Company's financial condition or results of operations. Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, many of which are outside of our control, and actual results may differ materially from those in the forward-looking statements. Among the risks and uncertainties that could cause our actual results to differ from our forward-looking statements are: uncertainties relating to our business operations and operating results; uncertainties regarding the governmental, economic and political environment in the People's Republic of China; uncertainties associated with metal and coal 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 filings with the Securities and Exchange Commission, including without limitation the information set forth in our Annual Report on Form 20-F under the heading "Risk Factors". While management believes that its assumptions forming the bases for forward-looking statements are reasonable, assumed facts or bases generally vary from actual results, and there can be no assurance that the expectations or beliefs expressed in forward-looking statements will be achieved or accomplished.


OVERVIEW


On January 22, 2014, the Company completed a spin-off of the coal business held by Feishang Anthracite by the distribution of CHNR's 100% equity interest in Feishang Anthracite, pro rata to all its shareholders (the "Distribution" or "Spin-off"). On the effective date of the Distribution, the Company also completed the listing of the shares of Feishang Anthracite by introduction on the Main Board of The Stock Exchange of The Hong Kong Limited ("Hong Kong Stock Exchange").


Following the Spin-Off the Company's sole operations consist of the operation of its non-ferrous metal mining operations at Yangchong Mine in the PRC. Based on production levels of iron ore for the first half of 2014, mining activity of our probable reserves for Yangchong mine is expected to continue until approximately 2016. As depletion approaches, production levels at the mine decrease from levels in prior periods. Therefore, it is expected that the Company will continue to operate at a loss unless management is able to identify new mining properties or new lines of business that are successfully integrated into the Company. While management is actively pursuing both alternatives, there is no assurance that such will occur.


SALES AND GROSS PROFIT


Sales for the six months ended June 30, 2014 totaled CNY7.90 million (US$1.27 million), a 50.15% decrease over the same period of 2013. The decrease was mainly comprised of (i) a decrease in the sales volume of iron concentrates by 52.35% to 8,056 tonnes during the period from 16,908 tonnes for the same period of 2013 in response to the low selling price of iron concentrates; and (ii) the drop in the average selling price of iron concentrate from CNY917 (US$148) per tonne in the six months ended June 30, 2013 to CNY851 (US$137) in the same period in 2014, which was partially offset by an increase in the sales of sulfur concentrate to CNY1.04 million (US$0.17 million) in the six months ended June 30, 2014 from CNY0.34 million (US$0.05 million) in the same period in 2013.


Sales for the second quarter of 2014 totaled CNY4.68 million (US$0.75 million), a 60.27% decrease over the same period last year. This decrease was mainly due to the decrease in the sales volume of iron concentrates by 62.00% to 4,910 tonnes during the period from 12,921 tonnes for the same period of 2013. The reasons for the change were the same as above.


The overall gross profit margin decreased from 27.56% for the six months ended June 30, 2013 to 23.65% for the same period of 2014. The drop was mainly due to a decline in the average selling price of iron concentrates. The drop in the selling prices was caused by the temporarily cyclical movement in the iron markets.


The drop in gross profit margin for the second quarter of 2014 from 32.72% to 19.62% is attributable to the same factors.




11 / 14




ADMINISTRATIVE EXPENSES


Administrative expenses decreased by CNY2.88 million (US$0.46 million) or 33.80% to CNY5.64 million (US$0.91 million) for the six months ended June 30, 2014 from CNY8.52 million (US$1.37 million) for the same period of 2013. This decrease was mainly caused by (i) a drop in audit fees amounting to CNY1.10 million (US$0.18 million) and (ii) a decrease of rent and rates fee amounting to CNY0.32 million (US$0.05 million) incurred in connection with the Spin-Off to shareholders of the Company's ownership of shares in Feishang Anthracite.


Administrative expenses decreased by CNY1.73 million (US$0.28 million) or 39.86% to CNY2.61 million (US$0.42 million) for the second quarter of 2014 from CNY4.34 million (US$0.70 million) for the same quarter of 2013. The decrease was attributable to the factors cited above.

 

IMPAIRMENT LOSS ON PROPERTY, PLANT AND EQUIPMENT


An impairment loss on property, plant and equipment of CNY7.37 million (US$1.19 million) was recorded for the six months ended June 30, 2014 in connection with the price decline of iron concentrates in the period. We determined the recoverable value of Yangchong Mine based on the mine's value-in-use ("VIU") using pre-tax cash flow projections, adopting certain assumptions based on the mine's past performance and our expectations on market development, applying an after-tax discount rate of 12.00%.


There was no impairment loss in the same period of 2013.


INCOME TAX EXPENSE


Management believes that the Company is not subject to US taxes.


Under the current laws of the BVI, dividends and capital gains arising from the Company's investments in the BVI are not subject to income taxes and no withholding tax is imposed on payments of dividends to the Company.


The Company's subsidiaries in the PRC are subject to a PRC enterprise income tax rate of 25% applicable to both foreign investment enterprises and domestic companies.


LOSS FOR THE PERIOD


The loss for the period of the Company decreased by CNY207.07 million (US$33.38 million) from a loss of CNY228.23million (US$36.79 million) for the six months ended June 30, 2013 to a loss of CNY21.17 million (US$3.41 million) for the six months ended June 30, 2014. The decrease in loss was mainly caused by: (i) the decrease of loss by CNY212.05 million (US$34.18 million) from the discontinued operations for the period; and (ii) the decrease in administrative expenses amounting to CNY2.88 million (US$0.46 million), notwithstanding: (i) the decrease in gross profits as a result of the drop in the sale price and volume of iron concentrate in the first half of 2014; and (ii) an impairment loss on property, plant and equipment of CNY7.37 million (US$1.19 million) incurred for the six months ended June 30, 2014.


The loss for the period of the Company decreased by CNY49.54 million (US$7.99 million) from CNY58.39 million (US$9.41 million) for the three months ended June 30, 2013 to CNY8.85 million (US$1.43 million) for the three months ended June 30, 2014. The decrease in loss was mainly due to (i) the decrease of loss by CNY58.16 million (US$9.38 million) from the discontinued operations for the period; (ii) the increase in administrative expenses amounting to CNY1.73 million (US$0.28 million), partially offset by the decrease in gross profits as a result of the drop in the sale price and volume of iron concentrate in the first half of 2014 and an impairment loss on property, plant and equipment of CNY7.37 million (US$1.19 million) incurred for the three months ended June 30, 2014.

 

LIQUIDITY AND CAPITAL RESOURCES


The Company's primary liquidity needs are to fund operating expenses and capital expenditures. To date, the Company has financed its working capital requirements primarily through internally generated cash, loans from the Shareholder and bank borrowings.




12 / 14




Net cash used for operating activities for the six months ended June 30, 2014 was approximately CNY13.04 million (US$2.10 million) as compared to net cash used for operating activities of CNY132.73 million (US$21.40 million) for the corresponding period in 2013. The decrease in net cash outflow was mainly comprised of net cash used for operating activities amounting to CNY124.51 million (US$20.07 million) by the discontinued Coal segment spun off on January 22, 2014.


The following summarizes the Company's financial condition and liquidity at the dates indicated:


 

 

December 31,

 

 

June 30,

 

 

 

2013

 

 

2014

 

 

 

CNY

 

 

CNY

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Current ratio

 

 

1.17X

 

 

 

4.97X

 

Working capital (CNY'000)

 

 

429,067

 

 

 

164,635

 


Net cash used in investing activities for the six months ended June 30, 2014 was CNY2.91 million (US$0.47 million), as compared to CNY120.15 million (US$19.37 million) in the corresponding period of 2013. The net cash used in investing activities for the six months ended June 30, 2013 was primarily comprised of the payment for the acquisition of property and equipment amounting to CNY119.31 million (US$19.23 million) by the discontinued Coal segment spun off on January 22, 2014.


Net cash used in financing activities for the six months ended June 30, 2014 was CNY6.13 million (US$0.99 million), as compared to CNY340.86 million (US$54.95 million) net cash provided in the corresponding period of 2013. The net cash used in financing activities for the six months ended June 30, 2014 was primarily comprised of the repayment to a related company, and the net cash provided in financing activities for the six months ended June 30, 2013 was primarily comprised of the net cash provided by the discontinued Coal segment spun off on January 22, 2014.


Our liquidity will likely be impacted in future quarters as minable reserves at Yangchong Mine, our sole mining property, start to diminish. While management is seeking to identify new mining properties and investigating the possible integration of new lines of business, there is no assurance that such will occur.


OFF BALANCE SHEET ARRANGEMENTS


The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.






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EXHIBIT INDEX


Exhibit Number

 

Description

99.1

  

Press Release dated December 4, 2014










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