China Shen Zhou Mining & Resources (SHZ) 8-K/A Financial Statements and Exhibits

\UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

	Page(s)
Introduction	PF1
Pro forma Combined Balance Sheet as of December 31, 2011	PF2
Pro forma Combined Statement of Operations for the year ended December 31, 2011	PF3
Notes to Pro forma Condensed Financial Information	PF4

Introduction

Wuchuan Dongsheng Mining Co., Ltd. (“Dongsheng Mining”) is a PRC limited liability company legally incorporated and validly existing in Wuchuan Yilao & Miao Autonomous County, Zunyi City, Guizhou Provincein the People’s Republic of China (“PRC” or “China”). Dongsheng Mining has a registered capital of RMB 2,000,000 with its business mainly inextraction and processing of fluorite ore and barite ore. Currently, it owns 100% of the mining rights of Shuanghe Fluorite Mine, Fenshui Qingshuzi Barite and Fluorite Mine, Baicun Fluorite Mine, Luping Fluorite Mine and Shibuya Barite and Fluorite Mine, and Douru Town Fluorite Flotation Plant and Fenshui Town Fluorite and Barite Flotation Plant, and a 30% equity interest of Wuchuan Chenhe Dongsheng Fluoride Industry Co., Ltd. (“Chenhe Fluoride”) in Wuchuan Yilao & Miao Autonomous County, Zunyi City, Guizhou Provincein the PRC.

Yanhe Tujiazu Autonomous County Meilan Mining Co., Ltd. (“Meilan Mining”) is a PRC limited liability company legally incorporated and validly existing in Yanhe Tujiazu Autonomous County, Tongren City, Guizhou Province in the PRC. Meilan Mining has a registered capital of RMB 1,334,000 with its business mainly inextraction of fluorite ore and barite ore. Currently, Meilan Mining owns 100% of the mining rights of the fluorite ores in Fengshuiling, Banchang Town, Yanhe Tujiazu Autonomous County, Tongren City, Guizhou Province in the PRC.

Guizhou Qianshi Resources Development Co., Ltd. (“Qianshi Resources”) is a PRC limited liability company legally incorporated and validly existing in Yanhe Tujiazu Autonomous County, Tongren City, Guizhou Province in the PRC. Qianshi Resources has a registered capital of RMB 1,000,000 with its business mainly in theextraction and processing of fluorite ore and barite ore. Currently, Qianshi Resources owns 100% of the mining rights of Jingliang Fluorite Mine, and the Fluorite Flotation Plant in the Huangtu Town, Yanhe Tujiazu Autonomous County, Tongren City, Guizhou Province in the PRC.

On January 16, 2012, China Shen Zhou Mining & Resources, Inc. (“China Shen Zhou”) (NYSE AMEX: SHZ), a US entityincorporated in the State of Nevada, whose primary operation isengaged in the exploration, development, mining and processing of fluorite, zinc, lead, copper, and other nonferrous metals in China, through its subsidiary Inner Mongolia Xiangzhen Mining Group Co., Ltd. (“Xiangzhen Mining”), entered into an equity transfer and capital increase agreement (the “Wuchuan Agreement”) to acquire 60% of the equity interests of Dongsheng Mining.

Pursuant to the Wuchuan Agreement, China Shen Zhou will acquire the Equity from the two shareholders of Dongsheng Mining (Gang Liu, a Chinese citizen, and Qiang Liu, a Chinese citizen) for total consideration in the amount of RMB 93 million (approximately US$ 14.65 million) (the “Purchase Price”). The Purchase Price will comprise RMB 43 million (approximately US$ 6.77 million) of the China Shen Zhou’s common stock and RMB 50 million (approximately US$ 7.88 million) in cash.

On February 7, 2012, Xiangzhen Mining purchased a 60% equity interest in Qianshi Resources, from Qianshi Resources’ two shareholders (Gang Liu and Guojian Zhou, a Chinese citizen) for RMB 6,000,000 in the form of 337,457 shares of the China Shen Zhou’s common stock. On February 7, 2012, Xiangzhen Mining also purchased a 60% equity interest in Meilan Mining, from Meilan Mining’s shareholder (Gang Liu) for RMB 9,000,000 in the form of 506,186 shares of the China Shen Zhou’s common stock.

The following pro forma combined financial information gives effect to the merger of China Shen Zhou and Dongsheng Mining, Meilan Mining, and Qianshi Resources using the purchase method of accounting, as required by Accounting Standards Codification ASC 805, “ Business Combinations. ” Under this method of accounting, China Shen Zhou allocated the purchase price to the fair value of assets acquired, including identified intangible assets. The purchase price allocation is subject to revision when China Shen Zhou obtains additional information regarding its purchased asset valuation. The pro forma combined balance sheet assumes the Merger took place on December 31, 2011. The Pro forma combined statements of operations assume that the Merger took place as of and for the year ended December 31, 2011.

The financial information presented in the pro forma combined financial statements is based on amounts and adjustments that China Shen Zhou’s management believes to be factually supportable. China Shen Zhou has made no attempt to included forward looking assumptions in such information.

Certain reclassifications have been made to Dongsheng Mining, Meilan Mining, and Qianshi Resources’ historical presentation to conform to China Shen Zhou’s presentation. These reclassifications do not materially impact the pro forma combined results of operations for the periods presented.

The pro forma adjustments, which are based upon available information and upon certain assumptions that China Shen Zhou believes are reasonable, are described in the accompanying notes. China Shen Zhou is providing the pro forma combined financial information for informational purposes only. The companies may have performed differently had they been combined as of and for the periods presented. You should not rely on the pro forma combined financial information as being indicative of the historical results that would have been achieved had the companies actually been combined during the periods presented or the future results that the combined companies will experience. The pro forma combined statements of operations do not give effect to any cost savings or operating synergies expected to result from the acquisitions or the costs to achieve such cost savings or operating synergies.

PF1

Unaudited Pro Forma Combined Balance Sheet

As of December 31, 2011

(Amounts in thousands)

	China Shen Zhou			DONGSHENG MEILAN AND QIANSHI			Pro Forma Adjustments				Pro Forma Combined Total
ASSETS							(Unaudited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	5,569		$	7		$	-			$	5,576
Notes receivable, net		1,019			-			-				1,019
Accounts receivable, net		3,332			724			-				4,056
Advances to suppliers		1,833			419			-				2,252
Acquisition deposit		2,359			-			(2,359	)	(a)		-
Due from related parties		-			282			-				282
Other deposits		258			157			-				415
Inventories		7,479			439			-				7,918
Restricted assets		2,536			-			-				2,536
Total current assets		24,385			2,028			(2,359	)			24,054
Restricted assets		175			85			-				260
Prepayment for vehicle rent		443			-			-				443
Long-term investment		-			750			-				750
Property, machinery and mining assets, net		60,313			5,015			24,425		(b)		89,753
Total assets	$	85,316		$	7,878		$	22,066			$	115,260
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,324		$	123		$	(22	)	(c)	$	3,425
Short term loans		11,996			786			-		(c)		12,782
Receipts in advance		1,528			870			(870	)	(c)		1,528
Government loan		-			1,620			-				1,620
Other payables and accruals		2,772			3,260			(3,260	)	(c)		2,772
Acquisition payable		-			2,359			(2,359	)	(c)		-
Due to related parties		250			238			(238	)	(c)		250
Taxes payable		1,877			1,148			(1,148	)	(c)		1,877
Total liabilities		21,747			10,404			(7,897	)	(c)		24,254
STOCKHOLDERS’ EQUITY:
Common Stock ($0.001 par value; 50,000,000 shares authorized;
32,285,973 shares issued and outstanding
as of December 31, 2011)		32			-			3		(d)		35
Contributed capital		-			634			(634	)	(e)		-
Additional paid-in capital		58,425			313			10,898		(f)		69,636
PRC statutory reserves		1,732			146			(146	)	(g)		1,732
Accumulated other comprehensive income		6,109			(41	)		41		(h)		6,109
Accumulated deficit		(13,344	)		(3,578	)		7,882		(i)		(9,040	)
Stockholders' equity - China Shen Zhou Mining & Resources, Inc. and Subsidiaries		52,954			(2,526	)		18,044				68,472
Noncontrolling interest		10,615			-			11,919				22,534
Total stockholders’ equity		63,569			(2,526	)		29,963				91,006
Total liabilities and stockholders’ equity	$	85,316		$	7,878		$	22,066			$	115,260

See accompanying introduction and notes to unaudited pro forma combined financial statements.

PF2

 Unaudited Pro Forma Combined Statement of Operations

For the Year Ended December 31, 2011

(Amounts in thousands, except per share data)

	China Shen Zhou			DONGSHENG MEILAN AND QIANSHI			Pro Forma Adjustments				Pro Forma Combined Total
							Unaudited				Unaudited
Net revenue	$	30,551		$	10,072		$	-			$	40,623
Cost of sales		17,051			5,201			-				22,252
Gross profit		13,500			4,871			-				18,371
Operating expenses:
Selling and distribution expenses		202			86			-				288
General and administrative expenses		11,197			2,479			1,466		(j)		15,142
Provision for doubtful accounts		(148	)		(130	)		-				(278	)
Total operating expenses		11,251			2,435			1,466				15,152
Net income (loss) from operations		2,249			2,436			(1,466	)			3,219
Other expense:
Interest expense		(682	)		(247	)		-				(929	)
Investment loss		-			(763	)		-				(763	)
Other, net		(40	)		(87	)		5,184		(k)		5,057
Total other expenses		(722	)		(1,097	)		5,184				3,365
Income (loss) from continuing operations before income taxes		1,527			1,339			3,718				6,584
Income tax expense		(1,235	)		(676	)		-				(1,911	)
Income (loss) from continuing operations		292			663			3,718				4,673
Discontinued operations :
Loss from operations of discontinued component, net of taxes		(7	)		-			-				(7	)
Loss on disposal of discontinued subsidiary, net of taxes		(82	)		-			-				(82	)
Income from discontinued operations		(89	)		-			-				(89	)
Net income (loss)		203			663			3,718				4,550
Add: Noncontrolling interests attributable to the noncontrolling interests		143			-			321		(l)		464
Net income (loss) - attributable to China Shen Zhou Mining & Resources, Inc. and Subsidiaries		346			663			4,039				5,048
Other comprehensive income:
Foreign currency translation adjustments		1,752			(42	)		42		(m)		1,752
Comprehensive  income (loss)	$	2,098		$	621		$	4,081			$	6,800
Net income (loss) per common share
From continuing operations		0.01										0.15
From discontinued operations		(0.00	)									(0.00	)
- Basic and Diluted		0.01										0.15
Weighted average common shares outstanding
- Basic and Diluted		31,369						3,262				34,631

See accompanying introduction and notes to unaudited pro forma combined financial statements.

PF3

Notes to Unaudited Pro Forma Combined Financial Information

1. Basis of Pro Forma Presentation

The pro forma combined financial information has been prepared based on China Shen Zhou’s historical financial information and the historical financial information of Dongsheng Mining, Meilan Mining, and Qianshi Resources giving effect to the acquisition and related adjustments described in these notes. Certain note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States have been or omitted as permitted by the SEC rules and regulations.

This pro forma combined financial information is not necessarily indicative of the results of operations that would have been achieved had the acquisition actually taken place at the dates indicated and do not purport to be indicative of future position or operating results.

The pro forma combined financial information has been prepared on the basis of assumptions relating to the allocation of consideration paid for the acquired assets and liabilities of Dongsheng Mining, Meilan Mining, and Qianshi Resources based on management’s best preliminary estimates. The actual allocation of the amount of the consideration may differ from that reflected in this pro forma combined financial information after a third party valuation and other procedures have been completed.

Below are tables of the preliminary estimated purchase price allocation for Dongsheng Mining, Meilan Mining, and Qianshi Resources:

		Shares		Price per share
Fair value of China Shen Zhou’s stock issued - Dongsheng Mining		2,418,448	$	1.74	$	4,208,000
Fair value of China Shen Zhou’s stock issued - Qianshi Resources		506,186		1.74		587,000
Fair value of China Shen Zhou’s stock issued - Meilan Mining		337,457		1.74		881,000
						5,676,000
Cash						7,897,000
Total purchase price					$	13,573,000
Fair value of acquired assets and liabilities:
Net assets acquired					$	7,878,000
Estimated fair value of identifiable extraction rights						25,891,000
Cash consideration will be invested to increase the stockhoders' equity						7,897,000
Liabilities						(10,404,000	)
						31,262,000
Acquisition of 60% share						60	%
						18,757,000
Purchase price						13,573,000
Negative goodwill to be taken into other income (bargain purchase)					$	5,184,000
						Noncontrolling Interests
					$	31,262,000
						40	%

China Shen Zhou management believes that the bargain purchase is a result of the distressed financial situation of the former majority shareholders of Dongsheng Mining, Meilan Mining, and Qianshi Resources who were not able to fully develop the mineral extraction potential of the properties to which Dongsheng Mining, Meilan Mining, and Qianshi Resources had rights to. Management estimates the bargain purchase to be approximately $5,195,000. This will be taken into other income when China Shen Zhou finalizes the valuation of the acquired assets of Dongsheng Mining, Meilan Mining, and Qianshi Resources. China Shen Zhou is still in the process of determining the fair value of assets acquired and liabilities assumed. Once determined, China Shen Zhou will record the acquisition at fair value. In addition, thenoncontrolling interest will reflect the full value of their share of Dongsheng Mining, Meilan Mining, and Qianshi Resources upon completion of the valuation.

PF4

2. Pro Forma Adjustments

(a)	Acquisition deposit amount to $2.36 million willused to be a part of the cash consideration for the acquisition of Dongsheng Mining, and will be eliminated with the shareholders’ equity ofWuchuan Mining, Meilan Mining and Qianshi Resources.
(b)	Reflects the estimated fair value of identifiable extraction rights and the amortization of value of extraction rights in 2011.
(c)	Total liability amount to $7,897,000 will be paid by Dongsheng Mining using the funds from the cash consideration.
(d)	As part of the Purchase Price for the acquisitions of Wuchuan Mining, Meilan Mining and Qianshi Resources, China Shen Zhou will issue 3,262,091 shares of China Shen Zhou’s common stock with $0.001 par value per share.
(e)	Reflects the elimination of Dongsheng Mining, Meilan Mining, and Qianshi Resources’ Contributed capital.
(f)	Reflects the elimination of Dongsheng Mining, Meilan Mining, and Qianshi Resources’ Additional paid-in capital. The Purchase Price will comprise 3,262,091 shares of China Shen Zhou’s common stock (with the fair value $1.74 per share) and RMB 50 million (approximately US$ 7.90 million) in cash. The cash component of the consideration will be in the form of a capital infusion into Wuchuan Mining.
(g)	Reflects the elimination of Dongsheng Mining, Meilan Mining, and Qianshi Resources’ PRC statutory reserves.
(h)	Reflects the elimination of Dongsheng Mining, Meilan Mining, and Qianshi Resources’ existing accumulated other comprehensive income.
(i)	Reflects the elimination of Dongsheng Mining, Meilan Mining, and Qianshi Resources’ existing stockholders’ deficit.
(j)	Reflects the depreciation and amortization of value of extraction rights.
(k)	Reflects the negative goodwill from bargain purchase.
(l)	Reflects the classification of 40% of the net income of 2011 to noncontrolling interests.
(m)	Reflects the classification of Dongsheng Mining, Meilan Mining, and Qianshi Resources’ currency translation adjustments.

PF5