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 2017.


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): ¨






1 / 16



 


Unaudited Results of Operations


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


(a)

Unaudited Financial Statements:


-

Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income (Unaudited) for The Three and Six Months Ended June 30, 2017 and 2016


-

Condensed Consolidated Statements of Financial Position as of June 30, 2017 (Unaudited) and December 31, 2016


-

Condensed Consolidated Statements of Cash Flows (Unaudited) for The Six Months Ended June 30, 2017 and 2016


-

Notes to Condensed Consolidated Financial Statements (Unaudited)


(b)

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


Press Release


On December 15, 2017 the Company issued a press release including a portion of the information contained in this current report. 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 15, 2017






2 / 16



 



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 15, 2017

By:

/s/ Wong Wah On Edward

 

 

 

Wong Wah On Edward

 

 

 

Chairman and Chief Executive Officer

 






















3 / 16



 


CHINA NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR

LOSS AND OTHER COMPREHENSIVE INCOME (UNAUDITED)

THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016

(Amounts in thousands, except per share data)


 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2016

 

 

2017

 

 

2017

 

 

2016

 

 

2017

 

 

2017

 

 

Notes

CNY

 

 

CNY

 

 

US$

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

(Restated)

 

 

 

 

 

 

 

 

(Restated)

 

 

 

 

 

 

 

CONTINUING OPERATIONS

         

                    

  

  

                    

  

  

                    

  

  

                    

  

  

                    

  

  

                    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative expenses

 

 

(2,075

)

 

 

(3,124

)

 

 

(461

)

 

 

(3,826

)

 

 

(5,741

)

 

 

(847

)

Other operating expense

 

 

(305

)

 

 

 

 

 

 

 

 

(1,059

)

 

 

 

 

 

 

OPERATING LOSS FROM CONTINUING OPERATIONS

 

 

(2,380

)

 

 

(3,124

)

 

 

(461

)

 

 

(4,885

)

 

 

(5,741

)

 

 

(847

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance costs

 

 

(7

)

 

 

(44

)

 

 

(6

)

 

 

(23

)

 

 

(107

)

 

 

(16

)

Interest income

 

 

23

 

 

 

9

 

 

 

1

 

 

 

27

 

 

 

19

 

 

 

3

 

Non-operating expenses, net

 

 

(39

)

 

 

(70

)

 

 

(10

)

 

 

(43

)

 

 

(391

)

 

 

(58

)

LOSS BEFORE INCOME TAX FROM CONTINUING OPERATIONS

 

 

(2,403

)

 

 

(3,229

)

 

 

(476

)

 

 

(4,924

)

 

 

(6,220

)

 

 

(918

)

Income tax expense

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FOR THE PERIOD FROM CONTINUING OPERATIONS

 

 

(2,403

)

 

 

(3,229

)

 

 

(476

)

 

 

(4,924

)

 

 

(6,220

)

 

 

(918

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/ profit for the period from a discontinued operation

2

 

(4,103

)

 

 

 

 

 

 

 

 

(6,078

)

 

 

10,978

 

 

 

1,619

 

(LOSS)/ PROFIT FOR THE PERIOD

 

 

(6,506

)

 

 

(3,229

)

 

 

(476

)

 

 

(11,002

)

 

 

4,758

 

 

 

701

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(238

)

 

 

(571

)

 

 

(84

)

 

 

(3,287

)

 

 

(745

)

 

 

(110

)

TOTAL OTHER COMPREHENSIVE LOSS

 

 

(238

)

 

 

(571

)

 

 

(84

)

 

 

(3,287

)

 

 

(745

)

 

 

(110

)

TOTAL COMPREHENSIVE (LOSS)/ INCOME FOR THE PERIOD, NET OF TAX

 

 

(6,744

)

 

 

(3,800

)

 

 

(560

)

 

 

(14,289

)

 

 

4,013

 

 

 

591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED (LOSS)/ EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY (PRESENTED IN CNY PER SHARE):

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For (loss)/ profit for the period

 

 

(0.26

)

 

 

(0.13

)

 

 

(0.02

)

 

 

(0.44

)

 

 

0.19

 

 

 

0.03

 

For loss from continuing operations

 

 

(0.10

)

 

 

(0.13

)

 

 

(0.02

)

 

 

(0.20

)

 

 

(0.25

)

 

 

(0.04

)


See notes to condensed consolidated financial statements



4 / 16



 


CHINA NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016

(Amounts in thousands)


 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2017

 

 

2017

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

Notes

(Audited)

 

 

(Unaudited)

 

 

(Unaudited)

 

ASSETS

            

                       

  

  

                       

  

  

                       

  

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

Property, plant and equipment

6

 

54,523

 

 

 

47,817

 

 

 

7,053

 

Rehabilitation fund

 

 

3,972

 

 

 

 

 

 

 

Prepayments

 

 

56

 

 

 

71

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON-CURRENT ASSETS

 

 

58,551

 

 

 

47,888

 

 

 

7,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Inventories

5

 

10,557

 

 

 

4,498

 

 

 

663

 

Prepayments

 

 

330

 

 

 

250

 

 

 

37

 

Other receivables

 

 

6,127

 

 

 

6,567

 

 

 

969

 

Cash and cash equivalents

 

 

19,228

 

 

 

14,860

 

 

 

2,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

 

36,242

 

 

 

26,175

 

 

 

3,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

94,793

 

 

 

74,063

 

 

 

10,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

2,736

 

 

 

1,147

 

 

 

169

 

Other payables and accrued liabilities

 

 

17,361

 

 

 

3,186

 

 

 

469

 

Taxes payable

 

 

22,627

 

 

 

17,610

 

 

 

2,597

 

Due to related companies

7

 

21,007

 

 

 

22,444

 

 

 

3,311

 

Due to the Shareholder

7

 

12,565

 

 

 

12,082

 

 

 

1,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

76,296

 

 

 

56,469

 

 

 

8,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Asset retirement obligations

 

 

5,302

 

 

 

386

 

 

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON-CURRENT LIABILITIES

 

 

5,302

 

 

 

386

 

 

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

81,598

 

 

 

56,855

 

 

 

8,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

 

312,081

 

 

 

312,081

 

 

 

46,034

 

Reserves

 

 

(298,886

)

 

 

(294,873

 

 

(43,495

)

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

13,195

 

 

 

17,208

 

 

 

2,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

 

94,793

 

 

 

74,063

 

 

 

10,924

 


See notes to condensed consolidated financial statements



5 / 16



 



CHINA NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2017 AND 2016

(Amounts in thousands)


 

 

Six months ended

June 30,

 

 

 

2016

 

 

2017

 

 

2017

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

(Restated)

 

 

 

 

 

 

 

 

  

                       

  

  

                       

  

  

                       

  

NET CASH FLOWS USED IN OPERATING ACTIVITIES

 

 

(21,066

)

 

 

(8,945

)

 

 

(1,319

)

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from disposal of Wuhu Feishang, net of cash disposed of

2

 

 

 

 

982

 

 

 

145

 

Disposal of property and equipment

 

 

 

 

 

60

 

 

 

9

 

Purchases of property and equipment

 

 

(1,684

)

 

 

(4,074

)

 

 

(601

)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET CASH FLOWS USED IN INVESTING ACTIVITIES

 

 

(1,684

)

 

 

(3,032

)

 

 

(447

)

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Repayment to a related company

 

 

(1,034

)

 

 

(1,584

)

 

 

(234

)

Advances from related companies

 

 

3,278

 

 

 

9,548

 

 

 

1,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET CASH FLOWS FROM FINANCING ACTIVITIES

 

 

2,244

 

 

 

7,964

 

 

 

1,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(20,506

)

 

 

(4,013

)

 

 

(592

)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET FOREIGN EXCHANGE DIFFERENCE

 

 

601

 

 

 

(355

)

 

 

(52

)

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

45,307

 

 

 

19,228

 

 

 

2,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

 

25,402

 

 

 

14,860

 

 

 

2,192

 


See notes to condensed consolidated financial statements.




6 / 16



 


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


Basis of consolidation


Management has prepared the accompanying unaudited condensed consolidated financial statements for the three-month and six-month periods ended June 30, 2017, and these operating results are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.


The condensed consolidated statement of financial position at December 31, 2016 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 annual report on Form 20-F of China Natural Resources, Inc. (“CHNR” or the “Company”) for the year ended December 31, 2016 (the “2016 Annual Report”).


The condensed consolidated financial statements include the accounts of CHNR and those subsidiaries in which CHNR has direct or indirect controlling interests (collectively referred to as the “Group”). The Company’s subsidiaries as of December 31, 2016 are as described in the 2016 Annual Report.


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$1.00 = CNY6.7794 as quoted by UKForex as of June 30, 2017, except as disclosed otherwise. No representation is made that the CNY amounts could have been, or could be, converted into US$ at that rate, or at all.


Going concern


As of June 30, 2017, the Group had net current liabilities of CNY30.29 million (US$4.47 million) and equity of CNY17.21 million (US$2.54 million). In view of these circumstances, the Directors have given consideration to the future liquidity and performance of the Group and its available sources of finance in assessing whether the Group will have sufficient financial resources to continue as a going concern. In order to improve the Group’s liquidity and cashflows to sustain the Group as a going concern, the Directors of the Company have taken certain measures to improve the cash flows of the Group, which include but are not limited to obtaining confirmations of continuous financial support from Feishang Group Limited (“Feishang Group” or the “Shareholder”), Feishang Hesheng Investment Limited (“Feishang Hesheng”) and Feishang Enterprise Group Limited (“Feishang Enterprise”), entities controlled by Mr. Li Feilie who is also the principal beneficial shareholder of the Company.


After taking into account the above measures, the Directors consider that the Group will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Therefore, the condensed consolidated financial statements of the Group have been prepared on a going concern basis.





7 / 16



 


2. DISCONTINUED OPERATION


On February 24, 2017, Feishang Mining Holdings Limited (“Feishang Mining”), a wholly-owned subsidiary of CHNR, and Wuhu City Feishang Industrial Development Co., Ltd. (“Wuhu Industrial”), as nominee for Feishang Mining (collectively referred to as the “Sellers”), entered into an agreement with Shen Yandi, an unrelated individual (the “Purchaser”), pursuant to which the Sellers sold and the Purchaser purchased, all of the Sellers’ right, title and interest in and to the outstanding capital stock of Wuhu Feishang Mining Development Co. Limited (“Wuhu Feishang”), which had previously been included in the Group’s non-ferrous metals segment, at a cash consideration of CNY1.00 million (US$0.15 million). The disposal was completed on March 3, 2017.


Wuhu Feishang was the primary contributor to the Group’s non-ferrous metals segment, which represented a separate major line of business with separately identifiable operations and cash flows. Accordingly, the results of Wuhu Feishang are classified and separately reported as a "discontinued operation" in the condensed consolidated statement of profit or loss and other comprehensive income for the period ended June 30, 2017. The comparative amounts reported in the condensed consolidated statements of profit or loss and other comprehensive income and related notes have been restated accordingly to reflect the reclassification between continuing operations and the discontinued operation. In addition, the gain recognized on the disposal of Wuhu Feishang is included in the results of the discontinued operation.


The details of the net assets of the discontinued operation as at March 3, 2017 are as follows:


 

 

 

 

 

March 3,

 

 

 

 

 

 

2017

 

 

 

 

 

 

CNY

 

Net assets disposed of:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

18

 

Rehabilitation fund

 

 

 

 

 

 

3,983

 

Inventories

 

 

 

 

 

 

5,644

 

Other receivables

 

 

 

 

 

 

47

 

Prepayments

 

 

 

 

 

 

73

 

Property, plant and equipment

 

 

 

 

 

 

7,613

 

Trade payables

 

 

 

 

 

 

(30

Taxes payable

 

 

 

 

 

 

(5,316

)

Other payables and accrued liabilities

 

 

 

 

 

 

(13,303

)

Due to fellow subsidiaries

 

 

 

 

 

 

(90

)

Due to related companies

 

 

 

 

 

 

(5,027

)

Asset retirement obligations

 

 

 

 

 

 

(4,952

)

Net assets disposed of:

 

 

 

 

 

 

(11,340

)

 

 

 

 

 

 

 

 

 

Gain on disposal of the discontinued operation

 

 

 

 

 

 

12,340

 

Consideration

 

 

 

 

 

 

1,000

 

 

 

 

 

 

 

 

 

 

Satisfied by:

 

 

 

 

 

 

 

 

Cash received in 2017

 

 

 

 

 

 

1,000

 

 

 

 

 

 

 

 

 

 

An analysis of the cash flows of cash and cash equivalents in respect of the disposal of the discontinued operation is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2017

 

 

 

 

 

 

 

 

CNY

 

Cash consideration received in 2017

 

 

 

 

 

 

1,000

 

Less: Cash and cash equivalents disposed of

 

 

 

 

 

 

(18

)

Net cash inflows from the disposal of the discontinued operation

 

 

 

 

 

 

982

 



8 / 16



 


2. DISCONTINUED OPERATION (CONTINUED)


The results of the discontinued operation are presented below:


 

Three Months Ended

June 30,2016

 

Six Months Ended

June 30,2016

 

For the period from January 1, 2017 to March 3,

2017

 

 

 

CNY

 

CNY

 

CNY

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

    

 

    

 

 

 

Selling and distribution expenses

(5

)

(12

 

 

Administrative expenses

(1,134

)

(2,370

)

 

(991

)

Losses arising from temporary suspension of production

(1,021

)

(2,453

)

 

(641

)

Reversal of write-down of inventories to net realizable value

251

 

784

 

 

 

Other operating income

42

 

143

 

 

61

 

 

 

 

 

 

 

 

 

OPERATING LOSS

(1,867

)

(3,908

 

(1,571

)

 

 

 

 

 

 

 

 

Finance costs

(87

)

(116

)

 

(30

)

Interest income

42

 

137

 

 

9

 

Non-operating income/(expense), net

(2,191

)

(2,191

)

 

230

 

LOSS BEFORE INCOME TAX

(4,103

)

(6,078

)

 

(1,362

)

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

LOSS FOR THE PERIOD FROM THE DISCONTINUED OPERATION

(4,103

)

(6,078

)

 

(1,362

)

 

 

 

 

 

 

 

 

Gain on disposal of the discontinued operation

 

 

 

12,340

 

(LOSS)/PROFIT FOR THE PERIOD FROM A DISCONTINUED OPERATION

(4,103

)

(6,078

)

 

10,978

 


The net cash flows incurred by the discontinued operation, excluding the cash consideration received from disposal of the discontinued operation are as follows:


 

Six Months Ended

June 30, 2016

 

 

 

For the period from January 1, 2017 to March 3,

2017

 

 

CNY

 

 

 

CNY

 

 

(Unaudited)

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Operating activities

(12,377

)

 

 

 

(2,727

)

Investing activities

 

 

 

 

60

 

Financing activities

(3,089

)

 

 

 

1,793

 

Net cash outflows

(15,466

)

 

 

 

(874

)




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2. DISCONTINUED OPERATION (CONTINUED)


The results of the discontinued operation are presented below:


 

Three Months Ended

June 30, 2016

 

Six Months Ended

June 30, 2016

 

For the period from January 1, 2017 to March 3,

2017

 

 

 

CNY

 

CNY

 

CNY

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

    

 

    

 

 

 

(Loss)/ earnings per share from the discontinued operation (Presented in CNY per share)

 

 

 

 

 

 

 

Basic

(0.16

)

(0.24

)

 

0.44

 

Diluted

(0.16

)

(0.24

)

 

0.44

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

(Loss)/profit attributable to owners of the Company from the discontinued operation

(4,103

)

(6,078

)

 

10,978

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares in issue during the period used in the earnings or loss per share calculations:

 

 

 

 

 

 

 

Basic

24,910,916

 

24,910,916

 

 

24,910,916

 

Diluted

24,910,916

 

24,910,916

 

 

24,910,916

 


3. RESTATEMENT


The Company’s acquisition of Double Grow International Limited (“Double Grow”) in 2016 was accounted for as a combination of entities under common control since the Company and Double Grow were under the common control of Mr. Li Feilie. The consolidated financial statements incorporate the financial statements of the combining entity in which the common control combination occurs as if they had been combined from the date when the combining entity first came under the control of the controlling party.


The disposal of Wuhu Feishang was completed on March 3, 2017 and Wuhu Feishang was classified as a discontinued operation. Accordingly, the results of the Wuhu Feishang were separately reported as a "discontinued operation" in the condensed consolidated statement of profit or loss and other comprehensive income for the period ended June 30, 2017. The comparative amounts reported in the condensed consolidated statements of profit or loss and other comprehensive income and related notes have been revised accordingly to reflect the reclassification between continuing operations and the discontinued operation.

As a result of the acquisition of Double Grow and the disposal of Wuhu Feishang, the relevant line items in the condensed consolidated statements of profit or loss and other comprehensive income for the three months and six months ended June 30, 2016 have been restated as follows:

 

 

The Group

(as previously reported)

 

Adjustment in relation to acquisition of Double Grow

 

Adjustment in relation to disposal of Wuhu Feishang

 

The Group

(as restated)

 

 

 

CNY

 

CNY

 

CNY

 

CNY

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

   

                                        

     

                                        

     

                                        

     

                                        

  

Condensed consolidated statements of profit or loss and other comprehensive income for three months ended June 30, 2016:

 

 

 

 

 

 

 

 

 

Selling and distribution expenses

 

(5

)

 

5

 

 

Administrative expenses

 

(2,118

)

(1,091

)

1,134

 

(2,075

)

Losses arising from temporary suspension of production

 

(1,021

)

 

1,021

 

 

Reversal of write down of inventories to net realizable value, net

 

251

 

 

(251

)

 

Other operating income/ (expenses)

 

71

 

(334

)

(42

)

(305

)

Finance costs

 

(86

)

(8

)

87

 

(7

)

Interest income

 

65

 

 

 (42

)

23

 

Non-operating expenses, net

 

(2,220

)

(10

)

 2,191

 

(39

)

Loss for the period from continuing operations

 

(5,063

)

(1,443

)

4,103

 

(2,403

)

Loss for the period from a discontinued operation

 

 

 

(4,103

)

(4,103

)



10 / 16



 




3. RESTATEMENT (CONTINUED)


 

 

The Group

(as previously reported)

 

Adjustment in relation to acquisition of Double Grow

 

Adjustment in relation to disposal of Wuhu Feishang

 

The Group

(as restated)

 

 

 

CNY

 

CNY

 

CNY

 

CNY

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

   

                                        

     

                                        

     

                                        

     

                                        

  

Foreign currency translation adjustments

 

(1

)

(237

)

 

(238

)

Total comprehensive income for the period, net of tax

 

(5,064

)

(1,680

)

 

(6,744

)

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to ordinary equity holders of the company:

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share:

 

 

 

 

 

 

 

 

 

  - For loss from continuing operations (CNY per share)

 

(0.20

)

(0.06

)

0.16

 

(0.10

)

  - For loss from a discontinued operation (CNY per share)

 

 

 

(0.16

)

(0.16

)

 

 

(0.20

)

(0.06

)

 

(0.26

)


 

 

The Group

(as previously reported)

 

Adjustment in relation to acquisition of Double Grow

 

Adjustment in relation to disposal of Wuhu Feishang

 

The Group

(as restated)

 

 

 

CNY

 

CNY

 

CNY

 

CNY

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

   

                                        

     

                                        

     

                                        

     

                                        

  

Condensed consolidated statements of profit or loss and other comprehensive income for six months ended June 30, 2016:

 

 

 

 

 

 

 

 

 

Selling and distribution expenses

 

(12

)

 

12

 

 

Administrative expenses

 

(4,439

)

(1,757

)

2,370

 

(3,826

)

Losses arising from temporary suspension of production

 

(2,453

)

 

2,453

 

 

Reversal of write down of inventories to net realizable value, net

 

784

 

 

(784)

 

 

Other operating income/ (expenses)

 

142

 

(1,058

)

(143)

 

(1,059

)

Finance costs

 

(116

)

(23

)

116

 

(23

)

Interest income

 

164

 

 

(137)

 

27

 

Non-operating expenses, net

 

(2,191

)

(43

)

2,191

 

(43

)

Loss for the period from continuing operations

 

(8,121

)

(2,881

)

6,078

 

(4,924

)

Loss for the period from a discontinued operation

 

 

 

(6,078

)

(6,078

)

Foreign currency translation adjustments

 

(9

)

(3,278

)

 

(3,287

)

Total comprehensive income for the period, net of tax

 

(8,130

)

(6,159

)

 

(14,289

)

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to ordinary equity holders of the company:

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share:

 

 

 

 

 

 

 

 

 

  - For loss from continuing operations (CNY per share)

 

(0.33

)

(0.11

)

0.24

 

(0.20

)

  - For loss from a discontinued operation (CNY per share)

 

 

 

(0.24

)

(0.24

)

 

 

(0.33

)

(0.11

)

 

(0.44

)


4. (LOSS)/ EARNINGS PER SHARE


Basic (loss)/earnings per share amounts are calculated using the weighted average number of 24,910,916 (June 30, 2016: 24,910,916) common shares outstanding during the period. The Company did not have any potentially dilutive issuances during the six months ended June 30, 2016 and 2017. Accordingly, the diluted (loss)/ earnings per share amounts are the same as the basic (loss)/earnings per share amounts.




11 / 16



 


5. INVENTORIES


 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2017

 

 

2017

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

(Audited)

 

 

(Unaudited)

 

 

(Unaudited)

 

                                                                                                                                         

  

                                

  

  

                                

  

  

                                

  

Raw materials

 

 

8,437

 

 

 

4,498

 

 

 

663

 

Finished goods

 

 

2,120

 

 

 

 

 

 

 

 

 

 

10,557

 

 

 

4,498

 

 

 

663

 


6. PROPERTY, PLANT AND EQUIPMENT


 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2017

 

 

2017

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

(Audited)

 

 

(Unaudited)

 

 

(Unaudited)

 

                                                                                                                                         

  

                                

  

  

                                

  

  

                                

  

At cost:

 

 

 

 

 

 

 

 

 

 

 

 

Buildings

 

 

28,713

 

 

 

5,596

 

 

 

825

 

Mining structures and mining rights

 

 

33,942

 

 

 

326

 

 

 

48

 

Machinery and equipment

 

 

7,654

 

 

 

928

 

 

 

137

 

Motor vehicles

 

 

7,356

 

 

 

5,413

 

 

 

798

 

Construction in progress

 

 

36,060

 

 

 

39,142

 

 

 

5,774

 

Accumulated depreciation, depletion and amortization

 

 

(59,202

)

 

 

(3,588

)

 

 

(529

)

 

 

 

54,523

 

 

 

47,817

 

 

 

7,053

 


7. RELATED PARTY BALANCES AND TRANSACTIONS


In addition to the transactions detailed elsewhere in these condensed 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,

 

 

 

2016

 

 

2017

 

 

2017

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

Notes

(Unaudited)

  

  

(Unaudited)

  

  

(Unaudited)

  

 

 

 

 

 

 

 

 

 

  

CHNR’s share of office rental, rates and others to Anka Consultants Limited (“Anka”)

i

 

(469

)

 

 

(634

)

 

 

(94

)

Gain on disposal of property, plant and equipment to Wuhu Industrial

ii

 

 

 

 

45

 

 

 

7

 

 

 

 

(469

)

 

 

(589

)

 

 

(87

)


(i)

On September 1, 2013, the Company signed an office sharing agreement with Anka, a private Hong Kong company that is owned by certain Directors of the Company. Pursuant to the agreement, the Company shared 119 square meters out of the total of 368 square meters of the office premises. On April 1, 2017, the Company signed an office sharing agreement with Anka which superseded all previously signed agreements between the parties, pursuant to which the Company shares 184 square meters of the total area of the office premises. The agreement also provides that the Company shares 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 services provided by Anka.


(ii)

On February 22, 2017, Wuhu Feishang signed an agreement with Wuhu Industrial, a related party, to dispose of certain property, plant and equipment prior to the Company’s disposal of Wuhu Feishang. The disposal gain amounted to CNY0.05 million (US$0.01 million).



12 / 16



 


7. RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)


(b)

Balances with related companies


The Company’s balances with related companies are unsecured, non-interest bearing. The balances are summarized as follows:


 

 

December 31,

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2017

 

 

2017

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

(Audited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Payable to related companies:

 

 

 

 

 

 

 

 

 

 

 

 

Empresa Minera Jacha Uru S.A.

 

 

1,298

 

 

 

1,522

 

 

 

225

 

Feishang Enterprise

 

 

7,832

 

 

 

3,924

 

 

 

579

 

Feishang Hesheng

 

 

11,877

 

 

 

16,998

 

 

 

2,507

 

 

 

 

21,007

 

 

 

22,444

 

 

 

3,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable to the Shareholder:

 

 

 

 

 

 

 

 

 

 

 

 

Feishang Group

 

 

12,565

 

 

 

12,082

 

 

 

1,782

 


8. 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. The Company’s Bolivian subsidiary is subject to a Bolivian enterprise income tax rate of 25% applicable to both foreign investment enterprises and domestic companies.


9. SUBSEQUENT EVENTS


On November 30, 2017, Yangpu Shuanghu Industrial Development Co., Limited (“Yangpu Shuanghu”), a wholly-owned subsidiary of CHNR, entered into separate agreements with Feishang Enterprise and Shenzhen Chaopeng Investment Co., Ltd. (“Shenzhen Chaopeng”), each of which is a related party. Pursuant to the agreement with Feishang Enterprise (the “Enterprise Group Agreement”), the Company consummated its acquisition of approximately 98.3% of the issued and outstanding capital shares of Bayannaoer City Feishang Mining Company Limited (“Bayannaoer Mining”). Pursuant to the agreement with Shenzhen Chaopeng (together with the Enterprise Group Agreement, the “Acquisition Agreements”), the Company consummated its acquisition of approximately 1.7% of the issued and outstanding capital shares of Bayannaoer Mining. The Acquisition Agreements are identical to each other except as to the name of seller, the amount of consideration and similar information.


The purchase price for all of the issued and outstanding capital shares of Bayannaoer Mining is CNY0.72 million (US$0.11 million), which is approximately equal to the net asset value of Bayannaoer Mining as of September 30, 2017. The purchase price was paid by delivery to Feishang Enterprise and Shenzhen Chaopeng of Yangpu Shuanghu’s several promissory notes (the “Notes”) in the aggregate amount of CNY0.72 million (US$0.11 million). The Notes are payable, without interest, on May 30, 2018.




13 / 16



 


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 related to the governmental, economic and political environment in the People’s Republic of China and Bolivia; uncertainties associated with metal price volatility; uncertainties related to our ability to fund operations; 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 2016 Annual Report 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.


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 tax 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.


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


LOSS FOR THE PERIOD FROM CONTINUING OPERATIONS


The loss from continuing operations for the six months ended June 30, 2017 increased by CNY1.30 million (US$0.19 million) from a loss of CNY4.92 million (US$0.73 million) for the six months ended June 30, 2016 to a loss of CNY6.22 million (US$0.92 million) for the six months ended June 30, 2017. The increase in loss was mainly caused by an increase in administrative expenses amounting to CNY1.92 million (US$0.28 million) resulting from the increase in audit fee and the expansion of Antay Pacha’s operations. The loss increase was partially offset by the absence in 2017 of other operating expenses amounting to CNY1.06 million (US$0.16 million) for the six months ended June 30, 2016, which mainly represents the expenses in preparation for the trial production of Antay Pacha.


The loss from continuing operations for the three months ended June 30, 2017 increased by CNY0.83 million (US$0.12 million) from CNY2.40 million (US$0.36 million) for the three months ended June 30, 2016 to CNY3.23 million (US$0.48 million) for the three months ended June 30, 2017. The increase in loss was mainly due to an increase in administrative expenses amounting to CNY1.05 million (US$0.15 million) resulting from the increase in audit fee and the expansion of Antay Pacha’s operations. The loss increase was partially offset by the absence in 2017 of other operating expenses amounting to CNY0.31 million (US$0.05 million) for the three months ended June 30, 2016, which mainly represents the expenses in preparation for the trial production of Antay Pacha.


LOSS/ PROFIT FOR THE PERIOD FROM A DISCONTINUED OPERATION


The discontinued operation represents the non-ferrous metal mining operation conducted by Wuhu Feishang. For the period from January 1, 2017 to March 3, 2017, Wuhu Feishang incurred a loss of CNY1.36 million (US$0.20 million) and a one-off gain on disposal of the discontinued operation of CNY12.34 million (US$1.82 million), compared with the loss of CNY6.08 million (US$0.90 million) for the six months ended June 30, 2016, and the loss of CNY4.10 million (US$0.60 million) for the second quarter of 2016. The loss mainly represents overhead costs incurred during the temporary suspension of production of Wuhu Feishang.




14 / 16



 


LIQUIDITY AND CAPITAL RESOURCES


The Company’s primary liquidity needs are to fund operating expenses. To date, the Company has financed its working capital requirements primarily through internally generated cash in prior years and non-interest bearing loans from the Shareholder and its affiliates. Although Antay Pasha’s copper smelting trial production run has begun, it can be expected that (a) the Company will continue to incur operating expenses prior to the commencement of revenue-producing activities and (b) the availability of internally generated funds to sustain operations will decrease until the commencement of commercial production of our copper smelting plant. It is currently projected that commercial production will commence in the second half of 2018. Feishang Group, Feishang Hesheng and Feishang Enterprise have confirmed that the balances due to them as at June 30, 2017 are not required to be settled during the ensuing 12 months.


Net cash used for operating activities for the six months ended June 30, 2017 was approximately CNY8.95 million (US$1.32 million) as compared to net cash used for operating activities of CNY21.07 million (US$3.11 million) for the corresponding period in 2016. The net cash outflows mainly represent the operating losses for the corresponding periods.


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


 

 

 

 

 

December 31,

 

 

June 30,

 

 

 

 

 

 

2016

 

 

2017

 

 

 

 

 

 

(Audited)

 

 

(Unaudited)

 

Current ratio

 

 

 

 

 

 

0.48x

 

 

 

0.46x

 

Working capital (CNY'000)

 

 

 

 

 

 

(40,054

)

 

 

(30,294

)


Net cash used in investing activities for the six months ended June 30, 2017 was CNY3.03 million (US$0.45 million), as compared with CNY1.68 million (US$0.25 million) for the corresponding period in 2016. The increase in investing activities cash outflows represents the acquisition of property and equipment for Antay Pacha’s copper smelting operations, which was partially offset by the net cash received from the disposal of Wuhu Feishang.


Net cash from financing activities for the six months ended June 30, 2017 was CNY7.96 million (US$1.17 million), as compared with CNY2.24 million (US$0.33 million) for the corresponding period in 2016. The net cash from financing activities is primarily comprised of net cash received from related parties.


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.



15 / 16



 


EXHIBIT INDEX


Exhibit Number

 

Description

99.1

     

Press Release dated December 15, 2017




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