CITY OF INDUSTRY, CA -- (Marketwire) -- 08/16/10 -- US China Mining Group, Inc. (OTCBB: SGZH), a Chinese leader in coal production and exploration in the People's Republic of China, today announced its financial results for the second quarter ended June 30, 2010.

For the three months ended June 30, 2010, the Company recorded revenues of $9.97 million compared to $24.18 million for the same period of 2009. The decrease in sales was primarily attributed to decreased production of Tong Gong Mine as a result of changing and rearranging of the Company's annual production plan due to outsourcing mining work to independent contractors as well as decreased production of Xing An Mines as a result of mine maintenance and retrofit projects that began at the end of fiscal 2009. The Company expects to partially resume production in November 2010 and fully resume production in February 2011.

Cost of sales for the three months ended June 30, 2010 was $6.09 million, a decrease of $2.69 million or approximately 31%, from $8.78 million for the same period of 2009. The Company's total production during the three months ended June 30, 2010 was 49,310 tons, compared to 184,553 tons produced for the same period of 2009, a decrease of 135,243 tons. Cost of sales as a percentage of sales increased to approximately 61% for the second quarter 2010 from approximately 36% for the same period of 2009. This increase was mainly due to significant decrease in the sales and increase of average cost per ton. The average cost per ton was $28.27 in the second quarter of 2010, compared to $16.96 for the same period in 2009. This increase was primarily attributable to increased cost per ton of outsourcing the mining work as a result of overall price inflation in China, as well as the non-cash increase of cost per ton from the amortization of cost of prepaid mining rights and the depreciation expense related to the Company's mineshafts resulting from the reserve appraisal of December 31, 2009.

Gross profit was $3.87 million for the second quarter of 2010 compared to $15.4 million for the same period of 2009, a decrease of $11.53 million. Gross profit as a percentage of sales was approximately 39% and 64% in the three months ended June 30, 2010 and 2009, respectively. The decrease in gross profit margin was mainly attributable to the decreased production and sales volume, decreased average selling price per ton and increased average cost per ton.

Net income for the three months ended June 30, 2010 was $1.83 million compared to net income of $11.38 million for the same period of 2009, a decrease of $9.55 million. Net income as a percentage of sales decreased from 47% for the second quarter of 2009 to 18% for the same period of 2010. This was mainly attributed to the significant decrease in the production and sales volume as well as increased average cost per ton of coal.

As of June 30, 2010, the Company had cash and cash equivalents of $32.86 million.

The average selling price per ton for the second quarter of 2010 was $46.25, compared to $49.59 for the same period of 2009, a decrease of 7%. The Company's total sales volume was 215,489 tons for the three months ended June 30, 2010, compared to 487,555 tons for the same period of 2009, a decrease of approximately 56%.

Mr. Hongwen Li, President of US China Mining Group, commented, "During the second quarter, traditionally one of our slowest, we continued to be negatively impacted by a decrease in production and lower sales volume due our mine maintenance and retrofit projects. We now expect to resume partial operations at the Xing An Mines during the fourth quarter and full operation in the first quarter 2011, which we anticipate will significantly boost our revenues and lower our costs."

About US China Mining Group

US China Mining Group is a company engaged in coal production and sales by exploring, assembling, assessing, permitting, developing and mining coal properties in the People's Republic of China ("PRC"). After obtaining permits from the Heilongjiang Province National Land and Resources Administration Bureau and the Heilongjiang Economic and Trade Commission, we extract coal from properties to which we have the right to mine capped amounts of coal, and then sell most of the coal on a per metric ton ("ton") basis in cash on delivery, primarily to power plants, cement factories, wholesalers and individuals for home heating. We do not own the coal mines, but have mining rights to extract a capped amount of coal from a mine as determined by government authorized mining engineers and approved by the Heilongjiang Department of Land and Resources. Our business consists of the operations of Tong Gong coal mine in northern PRC, located approximately 175 km southwest of the city of Heihe in the Heilongjiang Province and the Hong Yuan and Sheng Yu coal mines located in the city of Mohe in Heilongjiang Province.

Safe Harbor Statement

This press release contains certain statements that may include 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believe, expect, anticipate, optimistic, intend, will" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risks and other factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.