SEC Company Response from CHINA NATURAL RESOURCES INC (CHNR) (CIK 0000793628) (CHNR) — Oct 14, 2008
CHINA NATURAL RESOURCES INC (CHNR) (CIK 0000793628)
Date: Oct. 14, 2008 · CIK: 0000793628 · Accession: 0001116502-08-001670
AI Filing Summary & Sentiment
Reasoning
Letter
China Natural Resources
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
AMENDMENT NO. 1 TO
FORM 20-F
______________
(Mark One)
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________________
OR
¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring shell company report ___________
Commission file number: 0-26046
CHINA NATURAL RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
British Virgin Islands
(Jurisdiction of incorporation or organization)
Room 2105, West Tower, Shun Tak Centre,
200 Connaught Road C., Sheung Wan, Hong Kong
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Common Shares, without par value
(Title of class)
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. 17,323,416 Common Shares as of December 31, 2007.
Indicate by check mark if the issuer is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨ No ý
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ¨ No ý
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ¨
Accelerated Filer ¨
Non-Accelerated Filer ý
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ý Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
Yes ¨ No ý
Explanatory Note:
On or about September 19, 2008, the Company received comments from the staff (“Staff”) of the United States Securities and Exchange Commission (“SEC”) relating to the Company annual report on Form 20-F for the year ended December 31, 2007, filed on June 3, 2008 (the “Annual Report”). This Amendment No. 1 to the Annual Report is filed to address the Staff’s comments. The revisions to the Annual Report relate primarily to the description of the Company’s business as set forth in Item 4, below. Amendment No. 1 amends and restates the Annual Report in its entirety.
CONVENTIONS
Unless otherwise specified, all references in this report to "U.S. Dollars," "Dollars," "US$," or "$" are to United States dollars; all references to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all references to "Renminbi" or "RMB" are to Renminbi Yuan, which is the lawful currency of the People's Republic of China ("China" or "PRC"). The accounts of the Company and its subsidiaries are maintained in either Hong Kong Dollars or Renminbi. The financial statements of the Company and its subsidiaries are prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars and from Hong Kong Dollars to U.S. Dollars are for the convenience of the reader. Unless otherwise indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars to Renminbi have been made at the single rate of exchange as quoted by the People's Bank of China (the "PBOC Rate") on December 31, 2007, which was U.S.$1.00 = RMB7.2971. Translations from Hong Kong Dollars to U.S. Dollars have been made at the single rate of exchange as quoted by the Hongkong and Shanghai Banking Corporation Limited on December 31, 2007, which was U.S.$1.00 = HK$7.7994. The Renminbi is not freely convertible into foreign currencies and the quotation of exchange rates does not imply convertibility of Renminbi into U.S. Dollars or other currencies. All foreign exchange transactions take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. No representation is made that the Renminbi or U.S. Dollar amounts referred to herein could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at the PBOC Rate or at all.
References to the “Company” or “CNRI” are to China Natural Resources, Inc. (formerly known as Billion Luck Company Ltd.), a British Virgin Islands company, which was the surviving company after a merger between China Resources and CNRI on December 9, 2004 (the “Redomicile Merger”). Unless the context otherwise requires, the Company and/or CNRI includes the operations of its predecessor and subsidiaries.
References to "Central Government" refer to the national government of the PRC and its various ministries, agencies, and commissions.
References to "Common Stock" are to the Common Stock, $.001 par value, of China Resources. References to “Common Shares” are to the Common Shares, without par value, of CNRI after the Redomicile Merger.
References to "China Resources" are to China Resources Development, Inc., a Nevada company, and the predecessor to CNRI.
References to “Feishang Mining” are to Feishang Mining Holdings Limited, a British Virgin Islands corporation and, since February 3, 2006, a wholly-owned subsidiary of CNRI.
References to "GAAP" or “U.S. GAAP” are to generally accepted accounting principles of the United States.
References to "Hainan" are to Hainan Province of the PRC.
References to "HARC" are to Hainan Cihui Industrial Company Limited, a Sino-foreign joint stock company organized in the PRC, and a wholly-owned subsidiary of the Company. On October 3, 2006, the Company disposed of its entire interest in HARC, including its subsidiaries, First Goods And Materials Supply And Sales Corporation, Second Goods And Materials Supply And Sales Corporation and Hainan Zhongwei Trading Company Limited, to an unaffiliated third party.
References to “iSense” are to iSense Limited, a Hong Kong company whose capital was 100% acquired by the Company on August 29, 2003. On July 31, 2006, the Company disposed of its entire interest in iSense to the director and former shareholder of iSense.
i
References to "Local Governments" are to governments in the PRC, including governments at all administrative levels below the Central Government, including provincial governments, governments of municipalities directly under the Central Government, municipal governments, county governments, and township governments.
References to “Medi-China” are to Zhongwei Medi-China.com Limited, a Hong Kong company and a wholly-owned subsidiary of Silver Moon. Medi-China is currently inactive.
References to the "PRC" or "China" include all territory claimed by or under the control of the Central Government, except Hong Kong, Macau, and Taiwan.
References to "PRC Government" include the Central Government and Local Governments.
References to "Provinces" include provinces, autonomous regions, and municipalities directly under the Central Government.
References to "Series B Preferred Stock" are to the Series B Preferred Stock, $.001 par value, of China Resources. References to “Series B Preferred Shares” are to the Series B Preferred Shares, without par value, of CNRI, after the Redomicile Merger.
References to “Silver Moon” are to Silver Moon Technologies Limited, a British Virgin Islands company, whose capital is 80% owned by the Company. Silver Moon is currently inactive.
References to "Sunwide" are to Sunwide Capital Ltd., a British Virgin Islands company, which is a wholly-owned subsidiary of the Company. Sunwide is currently inactive.
References to “Wuhu” are to Wuhu Feishang Mining Development Co. Limited, a company organized in the PRC and a wholly-owned subsidiary of Feishang Mining.
References to “Yunnan Mining” are to Yunnan Feishang Mining Co. Limited, a company organized in the PRC and a wholly-owned subsidiary of Wuhu.
References to “Hainan Nonferrous Metal” are to Hainan Nonferrous Metal Mining Co. Limited, a PRC joint stock limited liability company, a 48% interest in which is collectively owned by Yunnan Mining and its nominee.
Forward-Looking Statements
This report contains statements that constitute forward-looking statements within the meaning of Federal securities laws. These statements appear in a number of places in this report and include, without limitation, statements regarding the intent, belief and current expectations of the Company, its directors or its officers with respect to the Company's policies regarding investments, dispositions, financings, conflicts of interest and other 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, and actual results may differ materially from those in the forward-looking statement as a result of various factors. 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, 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 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 filings with the Securities and Exchange Commission, including without limitation the information set forth in Item 3D of this report under the heading, "Risk Factors,". With respect to forward-looking statements that include a statement of its underlying assumptions or bases, the Company cautions that, while it believes such assumptions or bases to be reasonable and has formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished.
ii
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
No disclosure is required in response to this Item.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
No disclosure is required in response to this Item.
ITEM 3.
KEY INFORMATION
A.
Selected Financial Information
On February 3, 2006 (the “Acquisition Date”), the Company consummated the acquisition of all of the issued and outstanding capital stock of Feishang Mining Holdings Limited (“Feishang Mining”), a British Virgin Islands corporation (the “Acquisition”). The acquisition of Feishang Mining by the Company was accounted for using the purchase method of accounting and is treated as a reverse acquisition because on a post-merger basis, the former Feishang Mining shareholder holds 86.4% of the outstanding Common Shares of the Company. As a result, Feishang Mining is deemed to be the acquirer for accounting purposes. Accordingly, the following selected financial data for the years ended December 31, 2003, 2004, 2005, 2006 and 2007, represent the operations of Feishang Mining and its wholly-owned subsidiary, Wuhu, through February 2, 2006 and the consolidated operations of Feishang Mining and the Company subsequent to February 2, 2006. We have retroactively restated our issued share capital to reflect the acquisition by Feishang Mining. The selected financial data are derived from (I) the audited financial statements of Anhui Fanchang Zinc and Iron Mine (the predecessor of Wuhu, see “history of Feishang Mining” below) for the four months ended April 30, 2003, (II) the audited financial statements of Wuhu for the eight months ended December 31, 2003; (III) the audited consolidated financial statements of Feishang Mining for the years ended December 31, 2004 and 2005, (IV) the audited consolidated financial statements of the Company for the year ended December 31, 2006 and 2007, and should be read in conjunction therewith. Details of the Company’s acquisition of Feishang Mining are described elsewhere in this report.
In thousands, except share amounts
Predecessor of
Wuhu (I)
Wuhu (II)
Feishang
Mining (III)
Feishang
Mining (III)
Company (IV)
Company (IV)
4 months ended
8 months ended
Year ended
Year ended
Year ended
Year ended
April 30,
December 31,
December 31,
December 31,
December 31,
December 31,
RMB
RMB
RMB
RMB
RMB
RMB
Operating Statement Data
Net sales
10,439
31,893
77,939
98,962
145,389
125,963
Operating expenses
(2,154
)
(4,541
)
(4,597
)
(9,172
)
(14,170
)
(38,541
)
Income from continuing
operations before income taxes
7,460
41,992
52,381
100,265
36,786
Income from continuing
operations
7,460
41,992
44,046
85,108
24,735
Income/(loss) from discontinued
operations
(159
)
(72
)
—
(12,560
)
—
Net Income, after deducting
share based compensation
expenses of RMB38,998
(US$5,344) in 2007
7,388
42,004
44,046
72,548
24,735
In thousands, except share amounts
Predecessor of
Wuhu (I)
Wuhu (II)
Feishang
Mining (III)
Feishang
Mining (III)
Company (IV)
Company (IV)
4 months ended
8 months ended
Year ended
Year ended
Year ended
Year ended
April 30,
December 31,
December 31,
December 31,
December 31,
December 31,
RMB
RMB
RMB
RMB
RMB
RMB
Income per share:
Basic
Continuing operations
0.08
0.75
4.21
4.41
7.46
1.86
Discontinued operations
(0.02
)
(0.01
)
—
—
(1.10
)
—
0.06
0.74
4.21
4.41
6.36
1.86
Income per share:
Diluted
Continuing operations
0.08
0.66
3.73
4.36
6.17
1.43
Discontinued operations
(0.02
)
(0.01
)
—
—
(0.91
)
—
0.06
0.65
3.73
4.36
5.26
1.43
Weighted average number
of shares outstanding
Basic
9,980,593
9,980,593
9,980,593
9,980,593
11,402,372
13,290,471
Diluted
9,980,593
11,249,369
11,245,975
10,110,036
13,798,731
17,347,024
April 30,
December 31,
Balance Sheet Data
Total assets
71,334
71,894
89,601
104,643
180,765
582,081
Current assets
30,522
28,416
Show Raw Text
CORRESP
1
filename1.htm
China Natural Resources
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
AMENDMENT NO. 1 TO
FORM 20-F
______________
(Mark One)
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________________
OR
¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring shell company report ___________
Commission file number: 0-26046
CHINA NATURAL RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
British Virgin Islands
(Jurisdiction of incorporation or organization)
Room 2105, West Tower, Shun Tak Centre,
200 Connaught Road C., Sheung Wan, Hong Kong
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Common Shares, without par value
(Title of class)
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. 17,323,416 Common Shares as of December 31, 2007.
Indicate by check mark if the issuer is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨ No ý
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ¨ No ý
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ¨
Accelerated Filer ¨
Non-Accelerated Filer ý
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ý Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
Yes ¨ No ý
Explanatory Note:
On or about September 19, 2008, the Company received comments from the staff (“Staff”) of the United States Securities and Exchange Commission (“SEC”) relating to the Company annual report on Form 20-F for the year ended December 31, 2007, filed on June 3, 2008 (the “Annual Report”). This Amendment No. 1 to the Annual Report is filed to address the Staff’s comments. The revisions to the Annual Report relate primarily to the description of the Company’s business as set forth in Item 4, below. Amendment No. 1 amends and restates the Annual Report in its entirety.
CONVENTIONS
Unless otherwise specified, all references in this report to "U.S. Dollars," "Dollars," "US$," or "$" are to United States dollars; all references to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all references to "Renminbi" or "RMB" are to Renminbi Yuan, which is the lawful currency of the People's Republic of China ("China" or "PRC"). The accounts of the Company and its subsidiaries are maintained in either Hong Kong Dollars or Renminbi. The financial statements of the Company and its subsidiaries are prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars and from Hong Kong Dollars to U.S. Dollars are for the convenience of the reader. Unless otherwise indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars to Renminbi have been made at the single rate of exchange as quoted by the People's Bank of China (the "PBOC Rate") on December 31, 2007, which was U.S.$1.00 = RMB7.2971. Translations from Hong Kong Dollars to U.S. Dollars have been made at the single rate of exchange as quoted by the Hongkong and Shanghai Banking Corporation Limited on December 31, 2007, which was U.S.$1.00 = HK$7.7994. The Renminbi is not freely convertible into foreign currencies and the quotation of exchange rates does not imply convertibility of Renminbi into U.S. Dollars or other currencies. All foreign exchange transactions take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. No representation is made that the Renminbi or U.S. Dollar amounts referred to herein could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at the PBOC Rate or at all.
References to the “Company” or “CNRI” are to China Natural Resources, Inc. (formerly known as Billion Luck Company Ltd.), a British Virgin Islands company, which was the surviving company after a merger between China Resources and CNRI on December 9, 2004 (the “Redomicile Merger”). Unless the context otherwise requires, the Company and/or CNRI includes the operations of its predecessor and subsidiaries.
References to "Central Government" refer to the national government of the PRC and its various ministries, agencies, and commissions.
References to "Common Stock" are to the Common Stock, $.001 par value, of China Resources. References to “Common Shares” are to the Common Shares, without par value, of CNRI after the Redomicile Merger.
References to "China Resources" are to China Resources Development, Inc., a Nevada company, and the predecessor to CNRI.
References to “Feishang Mining” are to Feishang Mining Holdings Limited, a British Virgin Islands corporation and, since February 3, 2006, a wholly-owned subsidiary of CNRI.
References to "GAAP" or “U.S. GAAP” are to generally accepted accounting principles of the United States.
References to "Hainan" are to Hainan Province of the PRC.
References to "HARC" are to Hainan Cihui Industrial Company Limited, a Sino-foreign joint stock company organized in the PRC, and a wholly-owned subsidiary of the Company. On October 3, 2006, the Company disposed of its entire interest in HARC, including its subsidiaries, First Goods And Materials Supply And Sales Corporation, Second Goods And Materials Supply And Sales Corporation and Hainan Zhongwei Trading Company Limited, to an unaffiliated third party.
References to “iSense” are to iSense Limited, a Hong Kong company whose capital was 100% acquired by the Company on August 29, 2003. On July 31, 2006, the Company disposed of its entire interest in iSense to the director and former shareholder of iSense.
i
References to "Local Governments" are to governments in the PRC, including governments at all administrative levels below the Central Government, including provincial governments, governments of municipalities directly under the Central Government, municipal governments, county governments, and township governments.
References to “Medi-China” are to Zhongwei Medi-China.com Limited, a Hong Kong company and a wholly-owned subsidiary of Silver Moon. Medi-China is currently inactive.
References to the "PRC" or "China" include all territory claimed by or under the control of the Central Government, except Hong Kong, Macau, and Taiwan.
References to "PRC Government" include the Central Government and Local Governments.
References to "Provinces" include provinces, autonomous regions, and municipalities directly under the Central Government.
References to "Series B Preferred Stock" are to the Series B Preferred Stock, $.001 par value, of China Resources. References to “Series B Preferred Shares” are to the Series B Preferred Shares, without par value, of CNRI, after the Redomicile Merger.
References to “Silver Moon” are to Silver Moon Technologies Limited, a British Virgin Islands company, whose capital is 80% owned by the Company. Silver Moon is currently inactive.
References to "Sunwide" are to Sunwide Capital Ltd., a British Virgin Islands company, which is a wholly-owned subsidiary of the Company. Sunwide is currently inactive.
References to “Wuhu” are to Wuhu Feishang Mining Development Co. Limited, a company organized in the PRC and a wholly-owned subsidiary of Feishang Mining.
References to “Yunnan Mining” are to Yunnan Feishang Mining Co. Limited, a company organized in the PRC and a wholly-owned subsidiary of Wuhu.
References to “Hainan Nonferrous Metal” are to Hainan Nonferrous Metal Mining Co. Limited, a PRC joint stock limited liability company, a 48% interest in which is collectively owned by Yunnan Mining and its nominee.
Forward-Looking Statements
This report contains statements that constitute forward-looking statements within the meaning of Federal securities laws. These statements appear in a number of places in this report and include, without limitation, statements regarding the intent, belief and current expectations of the Company, its directors or its officers with respect to the Company's policies regarding investments, dispositions, financings, conflicts of interest and other 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, and actual results may differ materially from those in the forward-looking statement as a result of various factors. 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, 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 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 filings with the Securities and Exchange Commission, including without limitation the information set forth in Item 3D of this report under the heading, "Risk Factors,". With respect to forward-looking statements that include a statement of its underlying assumptions or bases, the Company cautions that, while it believes such assumptions or bases to be reasonable and has formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished.
ii
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
No disclosure is required in response to this Item.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
No disclosure is required in response to this Item.
ITEM 3.
KEY INFORMATION
A.
Selected Financial Information
On February 3, 2006 (the “Acquisition Date”), the Company consummated the acquisition of all of the issued and outstanding capital stock of Feishang Mining Holdings Limited (“Feishang Mining”), a British Virgin Islands corporation (the “Acquisition”). The acquisition of Feishang Mining by the Company was accounted for using the purchase method of accounting and is treated as a reverse acquisition because on a post-merger basis, the former Feishang Mining shareholder holds 86.4% of the outstanding Common Shares of the Company. As a result, Feishang Mining is deemed to be the acquirer for accounting purposes. Accordingly, the following selected financial data for the years ended December 31, 2003, 2004, 2005, 2006 and 2007, represent the operations of Feishang Mining and its wholly-owned subsidiary, Wuhu, through February 2, 2006 and the consolidated operations of Feishang Mining and the Company subsequent to February 2, 2006. We have retroactively restated our issued share capital to reflect the acquisition by Feishang Mining. The selected financial data are derived from (I) the audited financial statements of Anhui Fanchang Zinc and Iron Mine (the predecessor of Wuhu, see “history of Feishang Mining” below) for the four months ended April 30, 2003, (II) the audited financial statements of Wuhu for the eight months ended December 31, 2003; (III) the audited consolidated financial statements of Feishang Mining for the years ended December 31, 2004 and 2005, (IV) the audited consolidated financial statements of the Company for the year ended December 31, 2006 and 2007, and should be read in conjunction therewith. Details of the Company’s acquisition of Feishang Mining are described elsewhere in this report.
In thousands, except share amounts
Predecessor of
Wuhu (I)
Wuhu (II)
Feishang
Mining (III)
Feishang
Mining (III)
Company (IV)
Company (IV)
4 months ended
8 months ended
Year ended
Year ended
Year ended
Year ended
April 30,
December 31,
December 31,
December 31,
December 31,
December 31,
2003
2003
2004
2005
2006
2007
RMB
RMB
RMB
RMB
RMB
RMB
Operating Statement Data
Net sales
10,439
31,893
77,939
98,962
145,389
125,963
Operating expenses
(2,154
)
(4,541
)
(4,597
)
(9,172
)
(14,170
)
(38,541
)
Income from continuing
operations before income taxes
778
7,460
41,992
52,381
100,265
36,786
Income from continuing
operations
753
7,460
41,992
44,046
85,108
24,735
Income/(loss) from discontinued
operations
(159
)
(72
)
12
—
(12,560
)
—
Net Income, after deducting
share based compensation
expenses of RMB38,998
(US$5,344) in 2007
594
7,388
42,004
44,046
72,548
24,735
In thousands, except share amounts
Predecessor of
Wuhu (I)
Wuhu (II)
Feishang
Mining (III)
Feishang
Mining (III)
Company (IV)
Company (IV)
4 months ended
8 months ended
Year ended
Year ended
Year ended
Year ended
April 30,
December 31,
December 31,
December 31,
December 31,
December 31,
2003
2003
2004
2005
2006
2007
RMB
RMB
RMB
RMB
RMB
RMB
Income per share:
Basic
Continuing operations
0.08
0.75
4.21
4.41
7.46
1.86
Discontinued operations
(0.02
)
(0.01
)
—
—
(1.10
)
—
0.06
0.74
4.21
4.41
6.36
1.86
Income per share:
Diluted
Continuing operations
0.08
0.66
3.73
4.36
6.17
1.43
Discontinued operations
(0.02
)
(0.01
)
—
—
(0.91
)
—
0.06
0.65
3.73
4.36
5.26
1.43
Weighted average number
of shares outstanding
Basic
9,980,593
9,980,593
9,980,593
9,980,593
11,402,372
13,290,471
Diluted
9,980,593
11,249,369
11,245,975
10,110,036
13,798,731
17,347,024
April 30,
December 31,
2003
2003
2004
2005
2006
2007
Balance Sheet Data
Total assets
71,334
71,894
89,601
104,643
180,765
582,081
Current assets
30,522
28,416
55