ZHEN DING RESOURCES INC. FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of
Our unaudited financial statements are stated in
Our financial statements are stated in
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in
As used in this quarterly report, the terms "we", "us", "our" and "our company"
mean
General Overview
We are engaged in seeking business partnership opportunities with companies that
are in the field of exploration and extraction of precious and/or base metals,
primarily in
Our Corporate History and Structure
Our principal office is located at Suite 111, 3900 Place De Java, Second Floor,
Our operational offices are located at:
We were incorporated in
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In the past decade there has been a worldwide recovery in the price and interest
in precious metals, minerals and industrial commodities. Such interest has been
fueled to a large degree, by the economic awakening of the two most populous
nations,
In
On
During 2012, a total of 50,746,358 shares of the issued and outstanding common
stock of
On
On
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The following illustrates our corporate and share ownership structure:
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Our Current Business Background
Presently, we conduct our operations exclusively through Zhen Ding JV, our joint venture company. However, we continue to look for other attractive potential acquisition targets in the mining industry.
Our joint venture, Zhen Ding JV, is equipped to process ore mined by our joint
venture partner Xinzhou Gold when in operation. Zhen Ding JV purchases the ore
in rock form from Xinzhou Gold and processes the ore into our final product,
which is a gold, silver, lead, zinc and copper ore concentrate. We estimate that
our processed product is 65% to 80% pure. The product is then sold to refineries
which further purify and separate the concentrate. Zhen Ding JV also arranges
all exploration, mining process and operations, and financial and administrative
support for Xinzhou Gold's mine, known as the
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We purchase all of our raw material from Xinzhou Gold for our ore processing operation and rely solely on Xinzhou Gold for our supply of ores. The veins most recently excavated by Xinzhou Gold in the permitted areas of our mines are very low grade and, as such, the production is minimal. The higher yielding and therefore more profitable veins run outside Xinzhou Gold's permitted mining area boundaries under its current license.
Xinzhou Gold applied for an extension of the permitted mining area, however, the
application was rejected by the government in
At the beginning of fiscal 2015, we idled our mineral processing plant due to an
overall downturn in the demand and market prices for our concentrates. This
downturn coincided with an overall economic recession in
Recent Activities
On
Since idling our mineral processing plant, we have actively sought an investment
of between
Due to our continued inability to raise sufficient financing to expand Xinzhou
Gold's mining permit, Xinzhou Gold elected to reapply for a new drilling permit
based on a scaled-down drilling plan. The resulting new permit application,
which was submitted to the
During the fall of 2019, the Zhen Ding JV received feedback from the
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Financing and Restructuring Efforts
During fiscal 2019 our management entered into negotiations with various related
party lenders regarding a possible restructuring or conversion of related party
debt. Effective
Results of Operations
Three Months Ended
We had a net loss of
The following table summarizes key items of comparison and their related increase (decrease) for the three month periods endedSeptember 30, 2021 and 2020: Percentage Increase (Decrease) From Three Month Period Ended Three Months Three Months September 30, 2020 to Ended Ended Three Month Period September 30, September 30, Ended September 30, 2021 2020 2021 General and administrative$ 15,710 $ 15,044 4.42 % Other (Income) Expense (39 ) (238 ) (83.61 )% Interest expense 133,078 141,755 (6.12 )% Net loss$ 148,749 $ 156,561 (4.98 )%
Nine Months Ended
We did not earn any revenues in the nine months ended
We had a net loss of
The following table summarizes key items of comparison and their related increase (decrease) for the nine month periods endedSeptember 30, 2021 and 2020: Percentage Increase (Decrease) From Nine Month Period Ended Nine Months Nine Months September 30, 2020 to Ended Ended Nine Month Period September 30, September 30, Ended 2021 2020 September 30, 2021 General and administrative$ 48,282 $ 52,466 (7.97 )% Other (Income) Expense (42 ) (242 ) (82.64 )% Interest expense 397,759 418,244 (4.89 )% Net loss$ 445,999 $ 470,468 (5.20 )% 17 Table of Contents
Liquidity and Capital Resources
Our balance sheet as of
Working Capital
At At
September 30, December 31,
2021 2020
Current assets $ 13,359 $ 3,256
Current liabilities 10,297,981 9,720,101
Working capital (deficit) $ (10,284,622 ) $ (9,716,845 ) As of
Cash Flows
Nine Months Ended
September 30,
2021 2020
Net cash provided by (used in) operating activities
(1,516 ) (233,243 )
Net increase in cash during period $ 10,103 $ 470
Operating Activities
Net cash used in operating activities during the nine months ended
Financing Activities
Cash provided by financing activities during the nine months ended
Plan of Operation
Our operating plan for the 12 months beginning
Our operating plan for the balance of fiscal 2021 is to seek an investment of
approximately
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The funds raised would be used to:
1. upgrade tailings pond and water treatment facility;
2. extend and expand permitted mining area of Xinzhou Gold to access
higher concentrate ore veins;
3. resume ore exploration and extraction activities;
4. re-start the mill;
5. re-test the mill;
6. develop expansion plans for our plant capacity;
7. drill additional holes near the concentration plant; and
8. undertake at least three deep drill holes in the permitted area to
re-commence greater milling operations as soon as possible.
This will involve re-testing the plant equipment and re-hiring all personnel that was laid off as a result of the mining halt. We will reactively seek partnerships with mining enterprises primarily active in the gold, silver and/or copper fields and subject to the general parameters described earlier to increase our supply of raw material. In addition, we will look for a partner in the natural resources field in order to enhance our future capability to access necessary funding and seek other businesses opportunities and other strategic transactions with a view toward diversifying our business and attracting new investment.
In order to execute our business plan over the next twelve months we expect to expend funds as follows:
Estimated Net Expenditures During the Next Twelve Months
$
Restart mill and mining related operations 3,000,000 General, Administrative Expenses
100,000
Consulting & Permit Fees 150,000
Misc 100,000
Total 3,350,000
In light of our nominal cash resources, we expect that we will be required to
raise approximately
The continuation of our business is dependent upon obtaining further financing, a successful program of exploration and/or development, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
We are not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.
Future Financings
We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.
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We presently do not have any arrangements for additional financing for the expansion of our exploration operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.
Off-Balance Sheet Arrangements
We have 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, and capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Use of Estimates and Assumptions
The Company prepares its financial statements in conformity with
Foreign Currency Adjustments
Assets and liabilities recorded in foreign currencies are translated at the
exchange rate on the balance sheet date. Revenue and expenses are translated at
average rates of exchange prevailing during the year. Any translation
adjustments are reflected as a separate component of stockholders' equity
(deficit) and have no effect on current earnings. Gains and losses resulting
from foreign currency transactions are included in current results of
operations. During the periods ended
Non-controlling Interests
Non-controlling interests in the Company's subsidiaries are reported as a component of equity, separate from the Company's equity. Purchase or sale of equity interests that do not result in a change of control are accounted for as equity transactions. Results of operations attributable to the minority interest are included in our consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, if any, will be reported at fair value with any gain or loss recognized in earnings.
Revenue Recognition
Revenue is recognized when products are shipped, title and risk of loss is passed to the customers and collection is reasonably assured. Payments received prior to the satisfaction of above criteria are deferred.
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