CHINA SHEN ZHOU MINING & RESOURCES, INC.

On May 7, 2012 and June 5, 2012, the Company redeemed $1,666,667 of the Preferred Stock through the issuance of 1,475,225 and 976,249 shares of the Company’s common stock, respectively. On August 14, 2012 and September 19, 2012, the Company redeemed another $1,666,667 of the Preferred Stock through the issuance of 2,688,838 and 2,074,148 shares of the Company’s common stock, respectively. As of September 30, 2012, the Company has paid $100,000 of dividends on the Preferred Stock.

The Company determines whether a mine is accounted for as being in an exploration stage or a production stage based upon US GAAP. Expenses incurred during exploration stage activities are expensed. Such exploration expenses determine if properties explored, contain adequate mineralized materials that would be cost effective to mine. If these exploration activities should result in a determination that properties explored have mineralized materials that are financials viable to be extracted, and the Company wishes to proceed with development of such property, then the Company commences development of these properties. The Company commences capitalizing development costs upon establishing proven and probable reserves (to the extent necessary to meet the definition under Industry Guide 7). Once a mine is considered to have completed their development and if the mine should enter the production stage, then the mines capitalized development costs are amortized using the UOP method based on the estimated recoverable volume of the mineralized material. The Company believes it is appropriate to account for Xiangzhen Mining property as a production-stage operation that has capitalized development costs and to account for Xingzhen Mining, Xinyi Fluorite, Dongsheng Mining, Meilan Mining and Qianshi Resources properties as production stage projects that are amortizing their development costs.

On November 9, 2012, the Company through its subsidiary Xiangzhen Mining and Qianzhen Mining entered into an equity transfer agreement to acquire 20% of the equity interests of Dongsheng Mining, Qianshi Resources and Meilan Mining from their original shareholders (Gang Liu, a Chinese citizen) for total consideration of approximately $3,201,000. The consideration was from the funds loaned to Mr. Gang Liu and his controlled companies (please see Note 11).

REVENUES. Net revenues for the nine months ended September 30, 2012 were approximately $16,529,000, representing an approximate $1,588,000 or 9% decrease as compared to the same period of 2011. The decrease was primarily due to the decrease in sales price for fluorite powder. The fluorite powder sales price for the nine months ended September 30, 2012 was approximate $248 per metric ton, representing an approximate $91 per metric ton or 27% decrease as compared to the same period of 2011.

GROSS PROFIT AND GROSS PROFIT MARGIN. For the nine months ended September 30, 2012, gross profit was approximately $2,303,000, which decreased by approximately 71% from $7,870,000 in gross profit for the same period of 2011. The gross profits from the fluorite segment were approximately $2,416,000 and $7,483,000 for the nine months ended September 30, 2012 and 2011, respectively. The gross profits from the non-ferrous metal segment were approximately ($113,000) and $387,000 for the nine months ended September 30, 2012 and 2011, respectively. The fluorite segment’s gross profits decrease was mainly due to the decrease in sale price for fluorite powder. The fluorite powder sales price for the nine months ended September 30, 2012 was approximate $248 per metric ton, representing an approximate $91 per metric ton or 27% decrease as compared to the same period of 2011. Gross profit margin was approximately 14% for the nine months ended September 30, 2012, a decrease from the gross profit margin of 43% for the same period of 2011.