The company sold 84,021 tonnes of coal, which was down 61% from 216,011t sold in the second quarter of 2011. Its total production for the three months ended June 2012 was 39,021t, compared to 42,959t produced for the 2011 period.

Gross profit was $1.4 million for the second quarter of 2012 compared to $4.1 million for the same period of 2011, a 65% decline. Operating loss was $3.8 million for the second quarter, compared to an operating loss of $0.3 million in the same quarter of 2011.

The increased loss was mainly due to decreased sales and increased percentage of cost and operating expenses to sales.

President of US China Mining Group Hongwen Li said: "With China's economy slowing down during 2012, many industries like energy and mining were feeling obviously slowing paces in terms of suppressed demand and reduced price.

“Our coal business was not spared as well, facing more than ever challenges in daily operation and financial results.

"However, we didn't want to speculate the downward market condition for fast cash. Instead, we maintain ourselves in long position.

“During the second quarter, the company kept focus on improving mining facilitates and continuing in capitalizing Xing An's retrofit project while holding position in coal inventory, as we anticipated the coal industry would rally up in the coming quarters along with China's continuing efforts to stabilize the economy."

The average sales price per tonne increased 17% year-over-year, from $52.37 to $61.25. At June 30, 2012, the company had 194,558t of coal in Xing An's inventory.

Cost of sales for the three months ended June 30, 2012, was $3.7 million, a $3.6 million decrease, or 49% drop, over the period a year ago due to lower production and sales.

Gross margins decreased 9% to 27% for the second quarter of 2012 due to higher labor, materials costs, increased mining fees and higher depreciation and amortization cost per tonne on average.

Operating expenses were $5.2 million, up $0.8 million from $4.4 million in the second quarter of 2011. The increase was due to increased supplies and machine accessory expenses, including expenditures for materials used to fix machines, and mining assets which increased $0.2 million for the three months ended June 30, 2012, compared to the same period of 2011.

Also an increased payroll of about $350,000 and welfare expenses and electricity and gas fees as a result of overall price inflation in China added to operating expenses.