SinoCoking Coal and Coke Chemical Industries Announces Fiscal 2013 Second Quarter Financial Results

  SinoCoking Coal and Coke Chemical Industries Announces Fiscal 2013 Second
                          Quarter Financial Results

Reports 22.8% Increase in Revenue

Upgrade of the Existing Coking Facility Reduces Dependency on High Cost Raw
Coal and Improves Margins

PR Newswire

PINGDINGSHAN, China, Feb. 19, 2013

PINGDINGSHAN, China, Feb. 19, 2013 /PRNewswire-FirstCall/ -- SinoCoking Coal
and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or
"SinoCoking"),  a vertically-integrated coal and coke processor, announced
today its financial results for the fiscal 2013 second quarter ended December
31, 2012.

Fiscal 2013 Second Quarter vs. Fiscal 2012 Second Quarter

  oTotal revenue increased by 22.8% to $21.2 million, as compared to $17.3
    million.
  oGross margin decreased to 13.8%, as compared to 19.0%.
  oNet income, including foreign currency transaction adjustment, was $1.1
    million or $0.04 per diluted share, as compared to net income of $3.3
    million or $0.13 per diluted share.

Producttype Fiscal 2013 Second Quarter           Fiscal 2012 Second Quarter
                      Weighted  Revenue   % of             Weighted  Revenue   %ofTotal
            MT*Sold Average   (million) Total   MT*Sold Average   (million) Revenue
                      Price/MT*           Revenue          Price/MT*
Coke Products
Coke         56,413   $ 185    $ 10.4   49.0%   36,094   $  234   $  8.5   49.2%
Coal Tar     1,441    $ 257    $  0.3  1.4%    1,668    $  255   $  0.4   2.3%
Coal Products
Raw Coal     17,520   $  75   $  1.3  6.2%    10,116   $   72  $  0.7   4.0%
Washed Coal  46,951   $ 195    $  9.2  43.4%   42,605   $  181   $  7.7   44.5%

* metric ton

Discussing fiscal 2013 second quarter financial results, SinoCoking's Chairman
and CEO, Mr. Jianhua Lv, noted, "The 22.8% increase in total revenue was
mainly due to higher coke and washed coal revenues. Coke revenue increased by
22% from a year ago despite lower average selling price due to the coke powder
that we sold during the period. Washed coal revenue increased by 19% due to
higher sales volume and average selling price than a year ago."

Mr. Lv continued, "Due to the ongoing mining moratorium for mid-size coal
producers, coal supplies in Henan Province were limited. Operations at our
four coal mines remain halted, as were production activities for all Henan
Province producers other than state-owned enterprises, and we met our coal
requirements largely by purchasing raw coal from other provinces. Our gross
margin for the quarter declined due to product mix as we purchased more coking
coal in the open market, for both coking and coal processing. Coking coal
prices remain at historically high levels and we expect prices to remain high
until the mining moratorium is lifted sometime in 2013 calendar year, although
there can be no assurance as to exactly when the mining moratorium will end
and when we can resume operations."

Mr. Lv added, "To reduce our dependency on high cost raw materials, such as
coking coal, we upgraded our existing coking facility, which has an annual
production capacity of 250,000 metric tons. Following the upgrade, we expect
our margins to improve, as the facility can now produce high quality coke and
coke by-products using low cost raw coal, such as long flame coal."

"The facility is designed to produce metallurgical coke and chemical coke,
using an identical manufacturing process from a series of three WG-86 Type
coke ovens lined up in a row. In 2012 calendar year, we purchased land use
rights to expand the facility site, and upgraded the ovens' capabilities to
improve their energy efficiency, capture additional by-products for refinement
into high value-added chemical products, and satisfy strict environmental
requirements. The upgrade was completed on December 26, 2012, and after a
30-day trial run, all three ovens have now reached the desired effects of the
upgrade."

He added, "Although the soft demand for coke and coke by-products in China
continues, we expect the market to recover in 2013 calendar year. Our
ambitious business plan includes the following:

  oComplete construction of our new 900,000 metric ton coking facility which
    will increase our annual production capacity to over 1.1 million metric
    tons. The facility will also have the ability to generate power and
    distill chemicals such as crude benzol, sulfur and ammonium sulfate from
    the coking process. The plant is also expected to produce purified coal
    gas, which we plan to sell as a fuel source through the state-owned gas
    grid, at a 20% lower price than liquid natural gas currently used by local
    residents.
  oAcquire coal mines in other provinces to source raw materials.
  oExplore opportunities to build up long term strategic business relations
    with quality mining companies to expand our coal trading business."

Mr. Sam Wu, SinoCoking's Chief Financial Officer noted, "We continue to fund
our business activities from cash flow from operations and bank loans. As
required by the Henan government, we are upgrading the safety-related systems
at our coal mines in order to be approved to resume our mining operations and
we are also in process of merging the operations of Hongchang mine, Shunli
mine and Shuangrui mine into a fully integrated mining operation. In the
first half of fiscal 2013, we invested approximately $24.7 million in these
mine upgrading and consolidation projects. To date, we have invested a total
of approximately $27.9 million as follows:

  oMine upgrading: total estimated cost of approximately $35.0 million; 70%
    or approximately $24.5 million to be paid by SinoCoking and the remainder
    by Henan Coal Seam Gas, our joint-venture partner. To date, we have paid
    approximately $17.0 million for these safety upgrades which are expected
    to be completed in calendar year 2013.
  oMine consolidation: total estimated cost of approximately $32.0 million.
    To date, we have paid approximately $10.9 million toward such
    integration. We expect to complete such integration 4-6 months after we
    obtain clearance from local authorities to resume our mining operations,
    which clearance we expect to receive in calendar year 2013."

Mr. Lv. concluded, "Our business remains strong and we believe that through
the upgrade of our current facility, we will be able to expand our product
offering and customer base, and also substantially improve our top and bottom
lines in 2013. Additionally, we are well positioned to take advantage of
additional opportunities once the coke market recovers."

Conference Call
Mr. Lv and Mr. Wu will host a conference call on Tuesday, February 19, 2013 at
10:00 am ET / 11:00 pm China time to discuss these results as well as recent
corporate developments.

Interested parties may participate in the call by dialing: (201) 493-6744.
Please call in 10 minutes before the conference is scheduled to begin and ask
for the SinoCoking call. After opening remarks, there will be a question and
answer period. Questions may be asked during the live call, or alternatively,
you may e-mail questions in advance to lcati@equityny.com.

The conference call will also be broadcast live over the Internet. To listen
to the webcast, please go to
http://www.investorcalendar.com/conferences/event.asp?ID=170463 or visit the
Company's website www.sinocokingchina.com and then go to Presentations/Events
page where the conference call is posted. Please go to the website at least 15
minutes early to register, and download and install any necessary audio
software. If you are unable to listen live, the conference call will be
archived and can be accessed for approximately 90 days. We suggest listeners
use Microsoft Internet Explorer as their web browser.

About SinoCoking
SinoCoking and Coke Chemical Industries, Inc., a Florida corporation, is a
vertically-integrated coal and coke processor that uses coal from both its own
mines and that of third-party mines to produce basic and value-added coal
products for steel manufacturers, power generators, and various industrial
users. SinoCoking has been producing metallurgical coke since 2002, and acts
as a key supplier to regional steel producers in central China. SinoCoking
also produces and supplies thermal coal to its customers in central China.
SinoCoking currently owns its assets and conducts its operations through its
subsidiaries, Top Favour Limited and Pingdingshan Hongyuan Energy Science and
Technology Development Co., Ltd., and its affiliated companies, Henan Province
Pingdingshan Hongli Coal & Coke Co., Ltd., Baofeng Coking Factory, Baofeng
Hongchang Coal Co., Ltd., Baofeng Hongguang Environment Protection Electricity
Generating Co., Ltd., Zhonghong Energy Investment Company, Henan Hongyuan Coal
Seam Gas Engineering Technology Co., Ltd., Baofeng Shuangri Coal Mining Co.,
Ltd., and Baofeng Xingsheng Coal Mining Co., Ltd.

For further information about SinoCoking, please refer to our periodic reports
filed with the Securities and Exchange Commission.

Forward Looking Statement
This press release contains forward-looking statements, particularly as
related to, among other things, the business plans of the Company, statements
relating to goals, plans and projections regarding the Company's financial
position and business strategy. The words or phrases "plans", "would be,"
"will allow," "intends to," "may result," "are expected to," "will continue,"
"anticipates," "expects," "estimate," "project," "indicate," "could,"
"potentially," "should," "believe," "think", "considers" or similar
expressions are intended to identify "forward-looking statements." These
forward-looking statements fall within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are
subject to the safe harbor created by these sections. Actual results could
differ materially from those projected in the forward-looking statements as a
result of a number of risks and uncertainties. Such forward-looking statements
are based on current expectations, involve known and unknown risks, a reliance
on third parties for information, transactions or orders that may be
cancelled, and other factors that may cause our actual results, performance or
achievements, or developments in our industry, to differ materially from the
anticipated results, performance or achievements expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially from anticipated results include risks and uncertainties related to
the fluctuation of local, regional, and global economic conditions, the
performance of management and our employees, our ability to obtain financing,
competition, general economic conditions and other factors that are detailed
in our periodic reports and on documents we file from time to time with the
Securities and Exchange Commission. Statements made herein are as of the date
of this press release and should not be relied upon as of any subsequent date.
The Company cautions readers not to place undue reliance on such statements.
The Company does not undertake, and the Company specifically disclaims any
obligation, to update any forward-looking statements to reflect occurrences,
developments, unanticipated events or circumstances after the date of such
statement. Actual results may differ materially from the Company's
expectations and estimates. The Company provides no assurances that any
potential acquisitions will actually be consummated, or if consummated that
such acquisitions will be on terms and conditions anticipated on the date of
this press release, and the Company makes no assurances with regard to any
results of any such acquisitions.

Contact:
SinoCoking                      Investor Relations Counsel:
Sam Wu, Chief Financial Officer The Equity Group Inc.
+ 86-375-2882-999          Lena Cati
sinocoking@sina.com             lcati@equityny.com / (212) 836-9611
www.sinocokingchina.com         www.theequitygroup.com

See Accompanying Tables

SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
                         For the Three Months Ended   For the Six Months Ended
                         December 31,                 December 31,
                         2012           2011          2012          2011
REVENUE                $ 21,238,642  $  17,297,333  $ 38,800,836  $ 39,448,667
COST OF REVENUE          18,302,685     14,008,015    33,955,623    28,955,472
GROSS PROFIT         2,935,957      3,289,318     4,845,213     10,493,195
OPERATING EXPENSES:
 Selling                 42,176         43,324        85,757        124,867
 General and             581,345        906,367       1,208,173     1,333,786
 administrative
    Total operating      623,521        949,691       1,293,930     1,458,653
    expenses
INCOME FROM OPERATIONS   2,312,436      2,339,627     3,551,283     9,034,542
OTHER INCOME (EXPENSE)
 Interest income         208,461        218,749       431,101       777,300
 Interest expense        (997,461)      (315,463)     (2,019,065)   (731,022)
 Other finance expense   (91,123)       (37,767)      (163,367)     (73,433)
 Other (expense)         8,333          8,492         8,333         (9,089)
 income, net
 Change in fair value    41,317         1,343,214     714,847       4,362,936
 of warrants
    Total other
    (expense) income,    (830,473)      1,217,225     (1,028,151)   4,326,692
    net
INCOME BEFORE INCOME     1,481,963      3,556,852     2,523,132     13,361,234
TAXES
PROVISION FOR INCOME     650,238        911,148       1,031,494     2,406,817
TAXES
NET INCOME               831,725        2,645,704     1,491,638     10,954,417
OTHER COMPREHENSIVE INCOME (LOSS)
 Foreign currency
 translation             280,321        640,615       (8,374)       1,829,359
 adjustment
COMPREHENSIVE INCOME   $ 1,112,046   $  3,286,319   $ 1,483,264   $ 12,783,776
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
 Basic                   21,121,372     21,090,948    21,121,372    21,090,948
 Diluted                 21,121,372     21,090,948    21,121,372    21,090,948
EARNINGS PER SHARE
 Basic                 $ 0.04        $  0.13        $ 0.07        $ 0.52
 Diluted               $ 0.04        $  0.13        $ 0.07        $ 0.52



SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
                                                    December 31,   June 30,
                                                    2012           2012
CURRENT ASSETS
 Cash                                             $ 216,201      $ 2,366,718
 Restricted cash                                    6,500,000      9,668,000
 Accounts receivable, trade, net                    14,884,162     12,017,231
 Notes receivable, trade                            237,750        14,176,800
 Notes receivable, mine acquisition                 -              9,155,520
 Other receivables                                  685,985        1,412,008
 Loans receivable                                   8,112,037      9,849,937
 Refundable deposit                                 4,755,000      4,752,000
 Inventories                                        2,890,260      2,382,444
 Advances to suppliers                             7,841,780      12,267,806
 Prepaid expenses                                   196,716        633,313
      Total current assets                          46,319,891     78,681,777
PLANT AND EQUIPMENT, net                            15,568,206     16,211,984
CONSTRUCTION IN PROGRESS                            39,404,413     39,379,553
OTHER ASSETS
 Prepayments                                        60,788,925     36,071,853
 Intangible assets, net                             31,620,946     31,635,487
 Long-term investments                              2,827,514      2,825,730
 Other assets                                       110,950        110,880
      Total other assets                            95,348,335     70,643,950
      Total assets                                $ 196,640,845  $ 204,917,264
LIABILITIES AND EQUITY
CURRENT LIABILITIES
 Short term loan - bank                           $ 5,706,000    $ 5,702,400
 Current maturity of long term loan                 23,775,000     20,592,000
 Accounts payable, trade                            572            4,023
 Notes payable                                      -              4,752,000
 Other payables and accrued liabilities             980,952        802,028
 Other payables - related parties                   189,711        156,227
 Acquisition payable                                4,596,500      4,593,600
 Customer deposits                                  138,545        138,457
 Taxes payable                                      1,732,681      1,522,062
      Total current liabilities                     37,119,961     38,262,797
LONG TERM LIABILITIES
 Long term loan                                     28,530,000     36,432,000
 Warrants liability                                 1,801          716,648
      Total long term liabilities                   28,531,801     37,148,648
      Total liabilities                             65,651,762     75,411,445
COMMITMENTS AND CONTINGENCIES
EQUITY
 Common stock, $0.001 par value, 100,000,000        21,121         21,121
 authorized,
 21,121,372 shares issued and outstanding
 Additional paid-in capital                         3,592,053      3,592,053
 Statutory reserves                                3,689,941      3,689,941
 Retained earnings                                  111,748,770    110,257,132
 Accumulated other comprehensive income             7,605,598      7,613,972
      TotalSinoCoking Coal and
      CokeChemicalsIndustries,
      Inc's equity                                  126,657,483    125,174,219
 NONCONTROLLING INTERESTS                           4,331,600      4,331,600
      Total equity                                  130,989,083    129,505,819
      Total liabilities and equity                $ 196,640,845  $ 204,917,264

SOURCE SinoCoking Coal and Coke Chemical Industries, Inc.

Website: http://www.sinocokingchina.com
 
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