10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File No. 001-34631

CHINA ARMCO METALS, INC.

(Exact name of registrant as specified in its charter)

NEVADA	26-0491904
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Waters Park Drive, Suite 98 San Mateo, California		94403
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (650) 212-7620

Securities registered under Section 12(b) of the Act:
Title of each class registered:	Name of each exchange on which registered:
Common Stock, par value $0.001	NYSE Amex LLC
Securities registered under Section 12(g) of the Act:
None (Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]   No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]   No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ ]  No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K.   [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]	Accelerated filer	[ ]
	[ ]		[ ]
Non-accelerated filer (Do not check if a smaller reporting company)	[ ]	Smaller reporting company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ]  No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. $9,608,898 on June 30, 2009.

As of March 29, 2010, the registrant had  11,727,724 shares of its common stock outstanding.

Documents Incorporated by Reference:

Portions of the Registrant’s definitive proxy statement relating to its 2009 Annual Meeting of Shareholders, to be filed no later than 120 days after the close of the Registrant’s year ended December 31, 2009, are hereby incorporated by reference in Part III of this Annual Report on Form 10-K.

CHINA ARMCO METALS, INC.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business.	2
Item 1A.	Risk Factors.	11
Item 1B.	Unresolved Staff Comments.	19
Item 2.	Properties.	19
Item 3.	Legal Proceedings.	20
Item 4.	(Removed and Reserved).
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	20
Item 6.	Selected Financial Data.	21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation.	21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	30
Item 8.	Financial Statements and Supplementary Data.	30
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	30
Item 9A (T).	Controls and Procedures.	31
Item 9B.	Other Information.	32
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	33
Item 11.	Executive Compensation.	33
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	33
Item 14.	Principal Accountant Fees and Services.	33
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	33
Signatures		34

PART I

ITEM 1.  BUSINESS

Overview

China Armco Metals, Inc. (“we”, “us”, “our” or “China Armco”) is a U.S. company that imports, sells and distributes a variety of metal ore to the metal refinery industry in the Peoples Republic of China (“PRC”). Also, in March 2010 we began operating a scrap metal recycling facility we recently constructed in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in the Jiangsu province of the PRC capable of producing 1 million metric tons of recycled metal per year.  Prior to June 27, 2008, we operated a fertilizer distribution business in the United States which we no longer operate.

Our Metal Ore Products and Distribution Business

We import, sell and distribute metal ore and non-ferrous metals to the metal refinery industry in China.  Our products include a range of metal ore such as iron ore, coal, chrome ore, nickel ore, copper ore, scrap metal, and manganese ore.  We obtain metal ore from global suppliers in Brazil, India, South America, Oman, Turkey, Nigeria, Indonesia and the Philippines.  We have established strong relationships with our clients and service their needs through our internal sales representatives.

We have established cooperative business relationships with global suppliers of metal ore and the PRC’s large iron and steel enterprises.  We enter into either long-term contracts with both suppliers and customers or spot price contracts based on market conditions and availability of supply.  Overseas supplier’s ship cargo to a designated seaport in the PRC and, in most of cases, the cargo is then shipped to customers directly. Payments are made in the form of telegraphic transfer (T/T) and by a letter of credit, depending on the transaction terms specified in the contract. Our customer or supplier is generally responsible for all shipping costs.

Steel Industry and Market for Iron Ore

China is the largest developing country in the world, and the demand for steel has been growing steadily over the past decade as the country continues to experience an industrial revolution.  We believe that domestic steel production will continue to increase at current levels as the PRC continues to grow.  The steel industry is an important basic industry of the PRC’s national economy, and it plays a vital role in the PRC’s recent industrialization efforts.  According to the World Steel Association, worldwide steel production reached 1,220 million metric tons for 2009.  This represented a decrease of 8.0% compared to 2008.  Steel production in the PRC reached 567.8 million metric tons in 2009, an increase of 13.5% compared to 2008. The PRC’s share of world steel product ion continued to grow in 2009 producing 47% of world total crude steel, an increase of 9 percentage points compared to 2008.

World demand for iron ore presently exceeds supply, exerting sustained upward pressure on prices. The biggest demand factor is China, which has accounted for 86% of overall demand growth since 2006. China is the largest producer and consumer of iron ore, representing approximately 54% and 35% of global demand and supply respectively1. In addition, Australian Bureau of Agricultural & Resource Economics estimates that demand for iron ore is expected to increase by 8 % in 2010, higher than the demand for iron ore in the year 2009 which increased by 2 %. The largest importer of iron ore is dominated by China2.

 

1 http://www.northlandresourcesinc.com/s/IronOreInfo.asp

 

2 http://paguntaka.org/2009/12/24/iron-ore-import-demand-of-china-japan-european-union-affect-increase-iron-ore-production-in-2010/

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Scrap Metal Recycling Industry

The steel industry has been actively recycling for more than 150 years, in large part because it is economically advantageous to do so. Scrap metal can replace iron ore in the production of steel.  It is cheaper to recycle metal than to mine iron ore and manipulate it through the production process to form 'new' steel.  Metal does not lose any of its inherent physical properties during the recycling process, and has drastically reduced energy and material requirements than refinement from iron ore. The continued utilization of scrap metal is a vital component of the domestic steel manufacturing industry.  Every ton of steel recycled saves 2,500 pounds of iron ore; 1,400 pounds of coal, and 120 pounds of limestone3. T he energy saved by recycling reduces the annual energy consumption of the industry by about 75%.

China's scrap metal imports reached nearly 14 million tons in 2009 compared to 3.6 million tons in 2008. However, Chinese steel mills' scrap metal stockpiles remained at a low level through the whole year. In 2009, steel mills only stockpiled an estimated 30 percent, on average, of their total scrap metal usage which suggests scrap metal traders were stockpiling large amounts of scrap metal in expectation of a price rise. This caused China's scrap metal to be in relatively short supply in 20094.

China's crude steel consumption is expected to increase by 50 million tons in 2010, which means demand for scrap metal will continue to be strong5. According to an analysis on international and domestic macroeconomic factors, it is expected that the demand for scrap metal in 2010 will be 85 million metric tons based on 2009 steel production levels. In addition, projected demand from the equipment manufacturing industry, casting industry, hardware industry and small steel plant consumption is estimated to result in China’s total demand for scrap metal in 2010 of 95million metric tons. 6

The scrap metal recycling industry in the PRC is highly fragmented and there are a few major recycling companies in the PRC market. Crude steel producers have their own scrap metal processing facilities to partially meet the production demand.  At the same time, the companies specializing in processing and distribution of scrap metal have quickly developed in recent years. There are about 15 scrap metal companies capable to process 200,000 metric tons annually7. Of the 83 million tons of scrap metals consumed by China in 2009, 10 million tons of scrap metals were supplied by these companies8. There are more than 2,000 scrap metal recycling companies w ith the average volume for each producer being less than 11,000 metric tons per year. In 2010, the amount of scrap metal accumulated from the community are 1.95 billion tons, when scrap metal production is 81 million metric tons. Base on the actual precaution rate of 67%, the actual scrap metal production in 2010 will be 55 million metric tons.9

 

3 http://www.journalofcommerce.com/article/id23321/steel

 

4 http://www.interfax.cn/news/12541

 

5 http://www.interfax.cn/news/12541

 

6 http://74.125.47.132/search?q=cache:S4B7jsDeydcJ:www.xddsteel.com/news/2010128/n40798208.aspx+%C2%B7+2009%E5%B9%B4%E5%BA%9F%E9%92%A2%E5%B8%82%E5%9C%BA%E5%9B%9E%E9%A1%BE%E4%B8%8E2010%E5%B9%B4%E5%B1%95%E6%9C%9B&cd=17&hl=en&ct=clnk&gl=us

 

7 http://www.chinascrap.org.cn/mrgz/gnxx/2008-11-06/12449.shtml

 

8 http://www.chinascrap.org.cn/mrgz/gnxx/2010-02-04/15734.shtml

 

9 http://www.chinascrap.org.cn/sbyjs/fgjgxsb/2009-08-14/14129.shtml

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The PRC identified the scrap metal recycling industry as a way to minimize the use of scarce natural resources and reduce energy consumption and emissions in the steel manufacturing industry.   In July 2005, the PRC’s “Steel Industry Development Policy” recommended that domestic steel producers increase the use of scrap metal in the production of steel.  The PRC also implemented a preferential tax policy that gives Armet Lianyungang an exemption from income tax in 2008 and 2009 followed by a 50% income tax exemption for 2010 through 2012.  In February 2006, The National Development and Reform Commission of China (“NDRC”), The Ministry of Science and Technology of China, and The Ministry of Environmental Protection of China jointly issued the “Automotive Products Recyc ling Technology Policy”.  Under the terms of this policy, auto makers are charged with the responsibility to recover and recycle abandoned vehicles.  We believe that this newly promulgated law will increase the availability of raw materials necessary for scrap metal recycling.

Scrap Metal Recycling and Development of Recycling Facility

Scrap metal recycling operations encompass buying, processing and selling of ferrous and non-ferrous recycled metals. In March 2010 we began operating the first phase of a recently constructed scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in Jiangsu Province located on 32 acres of land.  Our facility is located approximately 3 miles from Lianyungang Port, one of the ten largest deep water seaports in the PRC, and one of the top 100 deep water ports in the world with annual cargo-handling capacity of approximately 120 million metric tons per year. After completion of testing and once operating at full capacity, the scrap metal recycling facility is expected to have a production capacity of 1 million metric tons of recycled scrap metal annually.

Construction of the first phase of the scrap metal recycling facility, equipment costs and the purchase of land use rights for 32 acres cost approximately $25.6 million. The recycling facility includes a scrap metal cutting production line, a large scrap metal cutting line, light thin waste/thin metal packing line and a preproduction facility that includes an automobile dismantling line, scrap metal grasping machines, strap transportation machines, radiation detection equipment, factory, administrative and operations offices, material pile stock and load meters.  We financed construction of this facility through a combination of net proceeds from the offering of our securities which we closed in August 2008, cash flow and vendor and debt financing.  

Competitive Strengths and Business Strategy

Scrap Metal Recycling Facility Expansion

Beginning in the third quarter of 2008, we embarked on a strategy to enter into the scrap metal recycling business.  Toward that end management constructed a scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in the Jiangsu province of the PRC.  We believe this facility offers several competitive advantages when compared to other metal recyclers in the PRC.  First, the facility is strategically located near the port of Lianyungang and is in close proximity to both shipping and rail facilities to access raw materials as well as distribute processed metals to a large geographic area in China to the North and South.  Second, there are two State owned steel manufacturing facilities currently under construction in the Banqiao Industrial Zone, each capa ble of producing 10 million metric tons of steel on an annual basis.  These facilities are both within 2 kilometers of our new recycling facility.  Third, our recycling facility uses U.S. made state of the art recycling equipment making our operations among the most technologically advanced in the PRC.

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We believe these advantages coupled with management’s experience in the metal ore distribution and steel manufacturing business, will enable us to grow the recycling business substantially in the coming years. To date we entered into an agreement in March of 2010 with a steel producer in China to provide up to 23,000 metric tons of scrap metal over the next 10 months.  Our ability to deliver on the maximum amount of scrap under this agreement will largely depend on our ability to secure a reliable source of the necessary raw materials. In addition,  we intend to devote a significant amount of capital toward the purchase of the materials necessary to deliver on this and other potential contracts derived from our expansion efforts.  As part of our future growth plans we intend to focus our scrap sourcing efforts in several areas.  Our proximity to a major port enables us to opportunistically source from abroad and our investment in automobile dismantling lines at our new facility enables us to capitalize on the bi-products of the rapidly growing automobile industry in China. Additionally, we intend to work with a number of domestic providers of scrap giving us numerous sources to take advantage of the most competitive prices.

Should we be successful in this new business, we intend to expand the capacity of our current metal recycling facility and have begun to formulate a plan for the second phase of these operations.  The next phase would include an expansion to increase our production capacity to 2,000,000 metric tons per year and construction of additional scrap automobile dismantling lines to address the emerging market demand of automobile recycling as China has become the biggest auto market in the world since 2009. While we are confident in our business plan, we intend to expand when we reach production and sales levels at our new facility that merit further investment.  Expansion of our existing facility would require a significant investment by us  and would likely require a significant capital infusion into the company.

Metal Ore Distribution Expansion

Our metal ore distribution business requires a significant amount of working capital to pay for the various ore and scrap metal we purchase and distribute to our customers in China.  We finance these purchases through a combination of various facilities including letters of credit and bank credit lines as well as with our own capital.  Our ability to obtain favorable financing is critical to our future growth.  Additionally, we have recently sought to secure longer term supply contracts to fuel our growth in this business and expand our overall gross margins.  Toward that end we signed a contract with a Brazilian company securing a 16 month supply of manganese ore for distribution in China.  We are looking to secure additional contracts for various ore and metals to further our sales expa nsion and are in the early stages of evaluating potential new supply opportunities.  This strategy may require a significant amount of additional capital depending on the size and nature of the terms of any contract we enter into.  We believe that this strategy will enable us to capitalize on the growth in metal imports in China.

Products and Customers

Metal Ore Operations

Products.  We buy and sell the following metal ore from time to time:

· Iron Ore which is the raw material used to make pig iron, one of the main raw materials used to make steel. Approximately 98% of the mined iron ore is used to make steel;

· Chrome Ore which is used to reinforce steel and, in association with high carbon, gives resistance to wear and abrasion.  It is also used in heat-resisting steels and high duty cast irons;

· Nickel Ore which is a silvery-white metal that takes on a high polish. It belongs to the transition metals, and is hard and ductile. It occurs most usually in combination with sulfur and iron in pentlandite, with sulfur in millerite, with arsenic in the mineral nickeline, and with arsenic and sulfur in nickel glance;

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· Copper Ore which is used as a heat conductor, an electrical conductor, as a building material, and as a constituent of various metal alloys;

· Manganese Ore which is a chemical element that is used industrially as pigments and as oxidation chemicals; and

· Steel Billet which is a section of steel used for rolling into bars, rods and sections.

· Magnesium Ore which is used in aluminum alloying, the addition of magnesium to aluminum produces high-strength, corrosion-resistant alloys.

Customers.  We sell our metal ore products to end-users such as steel producing mills, steelmakers, foundries and brokers who aggregate materials for other large users. We enter into either long-term contracts with both suppliers and customers or through negotiated spot sales contracts which establishes the quantity purchased for the month. The price we charge for ore depends upon market demand, supply and transportation costs, as well as quality and grade of the metal ore. In many cases, our selling price also includes the cost of transportation to the destination port of the end-user.  We sell processed and nonferrous ore to end-users such as specialty steelmakers, foundries, aluminum sheet and ingot manufacturers, copper refineries and smelters, brass and bronze ingot manufacturers, wire and cable producers, utilities and telephone networks.

In 2009, the following customers accounted for over 10% of the revenue generated in our metal ore business:

Customer	2009			2008
China-Base Ningbo Foreign Trade Co., Ltd		25.1	%		33.8	%
Sundial metals and minerals		21.9	%		-
Lianyungang Jiaxin Resources Import & Export Co., Ltd.		22.5	%		21.4	%
Shandong Yongjia Import & Export Co, Ltd.		10.0	%		-

Scrap Metal Operations

In 2009, our scrap metal recycling facility was under construction so we did not process or sell any scrap metal.  We expect the facility to achieve the capacity of half million metric tons output by the end of 2010 and reach full production capacity of one million metric tons of scrap metal in 2011.  In February 2010, we entered into a contract to scrap metal, crushed aggregates, charging materials and heavy scrap to a PRC steel producer.  Under the terms of the agreement, the purchaser plans to buy 23,000 tons of a mixture of these materials on a monthly basis over a 10 month period beginning in March 2010 following our receipt of a monthly order from the buyer with pricing and terms.  Pricing will be determined on the 25th of each month to calculate the following month’s unit price per ton, and we are responsible to pay all transportation and insurance costs associated with the shipments.

In addition, we plan to sell recycled scrap metal to our existing customers and others, in reusable forms that they require.

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Competition

The market for the purchase of raw scrap metal is highly competitive. We compete in the domestic market for the purchase of scrap metal with large, well-financed recyclers of scrap metal as well as smaller metal facilities and dealers. In general, the competitive factors impacting the purchase of scrap metal are the price offered by the purchaser and the proximity of the purchaser to the scrap metal source. We also compete with brokers who buy scrap metal on behalf of domestic steel mills and coordinate shipments of certain grades of processed scrap from smaller scrap dealers using shipping containers. The weaker global economy, reduced production of automobiles and fewer construction projects have resulted in reduced supply of scrap metal available.

We compete in a global market for the sale of processed recycled metal to finished steel producers. The predominant competitive factors that impact recycled metal sales are price (including shipping cost) and reliability of service, product quality and availability of scrap metal and scrap metal substitutes.

Sources and Availability of Raw Materials

Iron Ore

We obtain ferrous and non-ferrous ore from a variety of sources including mining companies, brokers and other intermediaries.  In 2009, the following suppliers accounted for over 10% of the purchases by Armco & Metawise:

Suppliers	Location	2009
Novo Commodities, Ltd.	Hongkong		36.4	%
An Hui Huan-tai Metal Import & Export Co., Ltd.	China		15.3	%
Henan Huichuang Shiye Ltd	China		11.2	%
Granton Natural Resources	Hongkong		10.1	%

Metal Recycling

In 2010 we expect to begin began to purchase scrap metal from the following sources:

· obsolete metal which is sourced from metal dealers, retail scrap metal dealers, auto wreckers, demolition firms, railroads and others who generate scrap metal or non-ferrous metals; and

· industrial generated materials which are sourced mainly from manufacturers who generate off cuts or by-products made from scrap metal, iron or non-ferrous metals, known as prompt or industrial metal.

We expect that the majority of our scrap metal collection and processing facility will receive raw metal via major railroad routes, waterways or major highways. Our recycling facility is located in central China in close proximity to railroad or shipping.  In addition, our recycling facility is located near two steel production facilities each with the capacity to produce 10 million tons of steel per year thereby giving us the competitive advantage of reduced freight costs because of the significant cost of freight relative to the cost of metal.

We enter into either long-term contracts with suppliers of scrap metal or through negotiated spot sales contracts which establishes the quantity purchased for the month. The price we pay for scrap metal depends upon market demand, supply and transportation costs, as well as quality and grade of the scrap metal. Among other things, the supply of these raw materials can be dependent on prevailing market conditions, including the buy and sell prices of ferrous and non-ferrous recycled metals. In periods of low prices, suppliers may elect to hold metal to wait for higher prices or intentionally slow their metal collection activities. In addition, a global slowdown of industrial production would reduce the supply of industrial grades of metal to the metal recycling industry, potentially reducing the amount of metals available for us to recycl e.

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GOVERNMENT REGULATION

Despite efforts to develop the legal system over the past several decades, including but not limited to legislation dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, the PRC continues to lack a comprehensive system of laws. Further, the laws that do exist in the PRC are often vague, ambiguous and difficult to enforce, which could negatively affect our ability to do business in the PRC and compete with other companies in our segments.

In September 2006, the Ministry of Commerce (“MOFCOM”) promulgated the Regulations on Foreign Investors' Mergers and Acquisitions of Domestic Enterprises (M&A Regulations) in an effort to better regulate foreign investment in the PRC. The M&A Regulations were adopted in part as a needed codification of certain joint venture formation and operating practices, and also in response to the government's increasing concern about protecting domestic companies in perceived key industries and those associated with national security, as well as the outflow of well-known trademarks, including traditional Chinese brands.

As a U.S. based company doing business in the PRC and Hong Kong, we seek to comply with all PRC laws, rules and regulations and pronouncements, and endeavor to obtain all necessary approvals from applicable PRC regulatory agencies such as the MOFCOM, the State Assets Supervision and Administration Commission ("SASAC"), the State Administration for Taxation, the State Administration for Industry and Commerce, the  PRC Securities Regulatory Commission ("CSRC"), the State Administration of Foreign Exchange ("SAFE") and all applicable laws of Hong Kong.

Economic Reform Issues. Since 1979, the Chinese government has reformed its economic systems. Many reforms are unprecedented or experimental; therefore they are expected to be refined and improved. Other political, economic and social factors, such as political changes, changes in the rates of economic growth, unemployment, inflation, or the disparities in per capita wealth between regions within the PRC, could lead to further readjustment of the reform measures. We cannot predict if this refining and readjustment process may negatively affect our operations in future periods, particularly in relation to future policies including but not limited to foreign investment, taxation, inflation and trade.

Currency. The value of the Renminbi (“RMB”), the main currency used in the PRC, fluctuates and is affected by, among other things, changes in the PRC’s political and economic conditions. The conversion of RMB into foreign currencies such as the U.S. dollar have been generally based on rates set by the People’s Bank of China, which are set daily based on the previous day’s interbank foreign exchange market rates and current exchange rates on the world financial markets.

Environment. We are currently subject to numerous Chinese provincial and local laws and regulations relating to the protection of the environment which are highly relevant to our metal ore business and the scrap metal recycling facility we intend to construct. These laws continue to evolve and are becoming increasingly stringent. The ultimate impact of complying with such laws and regulations is not always clearly known or determinable because regulations under some of these laws have not yet been promulgated or are undergoing revision.  In 2009 we did not spend any funds related to compliance with environmental regulations

EMPLOYEES

As of March 22, 2010 we have 56 full time employees, including 2 employees in the United States and 54 employees in the PRC. We believe we have good working relationships with our employees. We are currently not a party to any collective bargaining agreements.

For our employees in the PRC, we are required to contribute a portion of their total salaries to the Chinese government’s social insurance funds, including medical insurance, unemployment insurance and job injuries insurance, as well as a housing assistance fund, in accordance with relevant regulations. We expect the amount of our contribution to the government’s social insurance funds to increase in the future as we expand our workforce and operations.

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Executive Officers of the Company

The following sets forth the name and ages of each of our executive officers as of December 31, 2009 and the positions they hold:

Name	Age		Positions and Offices Held
Kexuan Yao		38	Chairman and Chief Executive Officer
Fengtao Wen		36	Chief Financial Officer
Weigang Zhao		31	Vice General Manager of Armet Lianyungang and Director

Kexuan Yao.  Mr. Yao was appointed as our Chairman of the Board of Directors and Chief Executive Officer in June 2008 in connection with our purchase of Armco & Metawise.  Mr. Yao has served as the Chairman and General Manager of Armco & Metawise since its inception in 2001.  From 1996 to 2001, Mr. Yao served as the General Manager of the Tianjian Branch for Zhengzhou Gaoxin District Development Co., Ltd.  Mr. Yao received a bachelor’s degree from Henan University of Agriculture in 1996.

Fengtao Wen.  Mr. Wen was appointed as our Chief Financial Officer in June 2008 in connection with our purchase of Armco & Metawise.  Mr. Wen has served as the accounting manager of Armco & Metawise and Henan Armco since 2005 and is responsible for supervision of financial controls and management of these entities.  From 1996 to 2005 Mr. Wen worked in the accounting department of Zhengzhou Smithing Co., Ltd.  Mr. Wen graduated from the Economics Department of Zhengzhou University in 1996.

Weigang Zhao.  Mr. Zhao was appointed as a member of our Board of Directors in June 2008 in connection with our purchase of Armco & Metawise.  Mr. Zhao has served as the Vice General Manager of Armet Lianyungang since 2007.  From 2005 through 2006 Mr. Zhao served as a manager in the supply department at Henan Anyang Steel Co., Ltd.  From 2003 through 2004 Mr. Zhao served as the marketing manager at Sinotrans Henan Co., Ltd.  Mr. Zhao graduated with a bachelor’s degree in Economics from Henan College of Finance and Economics in 2002.

Key Employees

Ji Zhang.  Mr. Ji Zhang, age 43 has served as General Manager of our subsidiary Armet (Lianyungang) Renewable Resource Co., Ltd. since June 2009 where he oversees all aspects of the operation and manufacturing of our scrap metal recycling facility. Mr. Zhang has more than 20 years experience in management, operations and marketing in the metals industry. Prior to joining Armet (Lianyungang), from 2005 to 2009, he served as executive vice general manager of the Domestic Trading Department of Fengli Group Co., Ltd., a seller of iron, raw steel and other metallic materials where he was responsible for scrap metal and iron ore trading to the steel industry. From 2005 to 2009 Mr. Zhang also served as deputy manager of Shanghai Xintai International Trading Co mpany where he was responsible for metal trading. Mr. Zhang also served as Vice general manager of Bengbu Renewable Resource Recycling Company, a subsidiary of Anhui Yu An Group, from 2004 to 2005 where he was responsible for scrap steel collection and scrap steel trading. From 1988 to 2004, Mr. Zhang served as General Manager and a manager of Jiangsu Steel Group Inc., a steel manufacturing company where he was responsible for  scrap steel collection and steel manufacturing operations. Mr. Zhang earned a degree from Lianyungang Vocational College in 1986.

Ronglu Wu.  Mr. Ronglu Wu, age 62, has served as the Vice General Manager of Armet (Lianyungang) since July 2008 where he is responsible for the operation of its manufacturing facilities, technology support and business planning. Mr. Wu has approximate 40 years experience in steel manufacturing. From 1969 to 2008, Mr. Wu worked for South-Steel Group, Inc., a steel manufacturing company where he held various technology and management positions. Among his responsibilities, Mr. Wu served as Chief of Technology in the engineering department, principal of its new facilities preparation division, deputy manager of its recycling department, economic forecasting, and manager of its production scheduling division. Mr. Wu earned a degree from South-Steel Metallur gical School in 1969 with a major in metal smelting.

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TRADEMARKS, LICENSES AND PATENTS

We do not own any trademarks. We do not consider the protection of trademarks to be important to our business.

Our Corporate History

We were formerly known as Cox Distributing, Inc., which was founded as an unincorporated business in January 1984 and became a “C” corporation in the State of Nevada on April 6, 2007.  Cox Distributing, Inc. was founded by Stephen E. Cox, our former president and chief executive officer, and engaged in the distribution of organic fertilizer products used to improve soil and growing conditions for the potato farmers of eastern Idaho.

Prior to June 27, 2008, Mr. Cox was our only employee.

On June 27, 2008, we entered into a share purchase agreement (the “Share Purchase Agreement”) and consummated a share purchase (the “Share Purchase”) with Armco & Metawise (H.K.), Ltd., a limited liability company established under the laws of Hong Kong (“Armco & Metawise”) and Feng Gao, who owned 100% of the issued and outstanding shares of Armco & Metawise.  In connection with the acquisition, we purchased from Ms. Gao 100% of the issued and outstanding shares of Armco & Metawise’s capital stock for $6,890,000 by delivery of our purchase money promissory note.  In addition, we issued to Ms. Gao a stock option entitling Ms. Gao to purchase a total of 5,300,000 shares of our common stock, par value $.001 per share at $1.3 0 per share which expired on September 30, 2008 and 2,000,000 shares at $5.00 per share which expires on June 30, 2010.  On August 12, 2008, Ms. Gao exercised her option to purchase and we issued 5,300,000 shares of our common stock in exchange for our $6,890,000 note held by Ms. Gao.  The 5,300,000 shares issued to Ms. Gao represented approximately 69.7% of our issued and outstanding common stock giving effect to the cancellation of 7,694,000 shares of our common stock owned by Mr. Cox.  As a result of the ownership interests of the former shareholders of Armco & Metawise, for financial statement reporting purposes, the merger between us and Armco & Metawise has been treated as a reverse acquisition with Armco & Metawise deemed the accounting acquirer and our company deemed the accounting acquiree under the purchase method of accounting in accordance with paragraph 805-40-05-2 of the FASB Accounting Standards Codification. The reverse merger is deemed a capital tran saction and the net assets of Armco & Metawise (the accounting acquirer) are carried forward on our (the legal acquirer and the reporting entity) at their carrying value before the combination.  The acquisition process utilized our capital structure and the assets and liabilities of Armco & Metawise which were recorded at historical cost.  Our equity is the historical equity of Armco & Metawise retroactively restated to reflect the number of shares issued by us in the transaction.

On June 27, 2008, we amended our Articles of Incorporation, and changed our name to China Armco Metals, Inc.

Pursuant to a call option agreement, dated June 27, 2008, as amended on December 18, 2008, entered into between our Chairman and Chief Executive Officer, Kexuan Yao and Feng Gao, Mr. Yao exercised the call right to acquire 5,300,000 shares of our common stock (the “Earn In Shares”) from Ms. Gao.

Armco & Metawise was incorporated on July 13, 2001 under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China (“PRC”).  Armco & Metawise engages in the import, export and distribution of ferrous and non-ferrous ore and metals, and the recycling of scrap steel.

Henan Armco and Metawise Trading Co., Ltd. (“Henan Armco”) was incorporated on June 6, 2002 in the City of Zhengzhou, Henan Province, PRC.  Henan Armco engages in the import, export and distribution of ferrous and non-ferrous ore and metals.

On January 9, 2007, Armco & Metawise formed Armet (Lianyungang) Renewable Resources Co, Ltd. (“Armet Lianyungang”), a wholly-owned foreign enterprise subsidiary in the City of Lianyungang, Jiangsu Province, PRC.  Armet engages in the recycling of scrap steel.

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On June 4, 2009, we formed Armco (Lianyungang) Holdings, Ltd. (“Lianyungang Armco”), a wholly-owned foreign enterprise subsidiary in the City of Lianyungang, Jiangsu Province, PRC.  Lianyungang Armco engages in marketing and distribution of the recycling of scrap steel.  

ITEM 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related To Our Business

We operate in a business that is cyclical and where demand can be volatile, which could have a material adverse effect on our results of operations and financial condition.

We operate in a business that is cyclical and where demand can be volatile, which could have a material adverse effect on our results of operations and financial condition. The timing and magnitude of the cycles in the business in which we operate are difficult to predict. Purchase prices for the raw materials we purchase (metal ore and scrap metal), and selling prices for our products (metal ore, scrap and recycled metal) are volatile and beyond our control. While we attempt to respond to changing raw material costs through adjustments to the sales price of our products, our ability to do so is limited by competitive and other market factors. Differences in economic conditions between the foreign markets, where we acquire our metal ore and a significant portion of our scrap metal, and the markets in the PRC, where we sell our products, c ould have an impact on our operating income. A significant reduction in selling prices for our products may adversely impact both our operating income and our ability to recover purchase costs from end customers. A decline in market prices for our products between the date of the sales order and shipment of the product may impact the customer’s ability to obtain letters of credit to cover the full sales amount. A decline in selling prices for our products coupled with customers failing to meet their contractual obligations may also result in a net realizable value adjustment to the average cost of inventory to reflect the lower of cost or fair market value. Additionally, changing prices could potentially impact the volume of raw materials available to us, the volume of ore and processed metal sold by us and inventory levels. The cyclical nature of our businesses tends to reflect and be amplified by changes in general economic conditions, both domestically and internationally. For example, during recess ions such as the one currently being experienced, the automobile and construction industries typically experience cutbacks in production, resulting in decreased demand for steel, copper and aluminum. This can lead to significant decreases in demand and pricing for our metal ore and recycled metal.

Our business depends on adequate supply and availability of raw materials.

Our business requires raw materials that are sourced from third-party suppliers. We rely on other suppliers, as well as industry supply conditions generally, which involves risks, including the possibility of increases in raw material costs and reduced control over delivery schedules. As a result, we may not be able to obtain an adequate supply of quality raw materials in a timely or cost-effective manner.

The principal markets we serve are highly competitive.

Many factors influence our competitive position, including product differentiation, geographic location, contract terms, business practices, customer service and cost reductions through improved efficiencies. An increase in competition or our inability to remain competitive could cause us to lose market share, increase expenditures, and reduce pricing, which could have a material adverse effect on our results of operations and financial condition.

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During uncertain economic conditions customers may be unable to fulfill their contractual obligations.

We enter into sales contracts preceded by negotiations that include fixing price, quantities, shipping terms and other contractual elements. Upon finalization of these terms and satisfactory completion of other contractual contingencies by us, our customers typically open a letter of credit to satisfy their obligation under the contract prior to shipment by us. Although not considered normal course of business, during uncertain economic conditions, we are at risk on consummating the transaction until successful completion of the letter of credit. As a result, the customer may not be able to fulfill our obligation under the contract in times of illiquid market conditions.

If we were to lose order volumes from any of our major customers, our sales could decline significantly and our cash flows may be reduced.

In 2009, our five largest customers were responsible for 79.0% of our total consolidated revenues. These customers purchase products from us on a spot or short term contract basis and may choose not to continue to purchase our products. A loss of order volumes from any major customer, including a related party, or a significant reduction in their purchase orders could negatively affect our financial condition and results of operations by lowering sales volumes, increasing costs and lowering profitability.

Equipment upgrades and equipment failures may lead to production curtailments or shutdowns.

We have never operated a recycling facility until March 2010.  Also, our recycling process depends upon critical pieces of equipment, including shredders and cranes, which may be out of service occasionally for scheduled upgrades or maintenance or as a result of unanticipated failures. Although construction of our recycling facilities was completed in March 2010, they are subject to equipment failures and the risk of catastrophic loss due to unanticipated events such as fires, accidents or violent weather conditions. As a result, we may experience interruptions in our processing capabilities, which could have a material adverse effect on our results of operations and financial condition.

We need additional financing to fund expansion of our recycling facility and working capital for our metal ore business which we may not be able to obtain on acceptable terms. Additional capital raising efforts in future periods may be dilutive to our then current shareholders or result in increased interest expense in future periods.

We need to raise additional capital to carry out our plans to expand the capacity of our recycling facility and increase the volume of our purchases of the metal ore we resell. Our future capital requirements depend on a number of factors, including the scope of our recycling facility expansion and the amount of available metal ore, the our ability to grow revenues from other sources, our ability to manage the growth of our business and our ability to control our expenses. Also, if we raise additional capital through the issuance of debt, this will result in increased interest expense. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. As we will ge nerally not be required to obtain the consent of our shareholders if we elect to expand our recycling facility or purchase more raw materials required in our operations, shareholders are dependent upon the judgment of our management in determining the number of, and characteristics of, stock issued to raise funds for these purposes and others. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock. We cannot assure you that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at all. If we do not raise capital as needed, our ability to expand our business will be limited.

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We need to manage growth in operations to maximize our potential growth and achieve our expected revenues and our failure to manage growth will cause a disruption of our operations resulting in the failure to generate revenue.

In order to maximize potential growth in our current and potential markets, we believe that we must expand our sales and marketing operations and efficiently operate our recently constructed scrap metal recycling facility. This expansion will place a significant strain on our management and our operational, accounting, and information systems. We expect that we will need to continue to improve our financial controls, operating procedures, and management information systems. We will also need to effectively recruit, train, motivate, and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

Certain agreements to which we are a party and which are material to our operations lack various legal protections which are customarily contained in similar contracts prepared in the United States.

Our subsidiaries include companies organized under the laws of the PRC and all of their business and operations are conducted in the PRC and Hong Kong. We are a party to certain contracts related to our operations in the PRC and Hong Kong.   While these contracts contain the basic business terms of the agreements between the parties, these contracts do not contain certain clauses which are customarily contained in similar contracts prepared in the U.S., such as representations and warranties of the parties, confidentiality and non-compete clauses, provisions outlining events of defaults, and termination and jurisdictional clauses.  Because our contracts in the PRC omit these customary clauses, notwithstanding the differences in Chinese and U.S. laws, we may no t have the same legal protections as we would if the contracts contained these additional clauses.  We anticipate that our Chinese and Hong Kong subsidiaries will likely enter into contracts in the future which will likewise omit these customary legal protections.  While we have not been subject to any adverse consequences as a result of the omission of these customary clauses, and we consider the contracts to which we are a party to contain all the material terms of our business arrangements with the other party, future events may occur which lead to a dispute which could have been avoided if the contracts included customary clauses in conformity with U.S. standards.  Contractual disputes which may arise from this lack of legal protection could divert management's time from the operation of our business, require us to expend funds attempting to settle a possible dispute, limit the time our management would otherwise devote to the operation of our business, and have a material a dverse effect on our business, financial condition and results of operations.

We depend on our key management personnel and the loss of their services could adversely affect our business.

We place substantial reliance upon the efforts and abilities of our executive officers, Kexuan Yao, our Chairman and Chief Executive Officer and Fengtao Wen, our Chief Financial Officer.  The loss of the services of any of our executive officers could have a material adverse effect on our business, operations, revenues or prospects.  We do not maintain key man life insurance on the lives of these individuals.

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Risks Related To Doing Business in China

A substantial portion of our assets and operations are located in the PRC and are subject to changes resulting from the political and economic policies of the PRC government.

Our business operations could be restricted by the political environment in the PRC.  The PRC has operated as a socialist state since 1949 and is controlled by the Communist Party of China.  In recent years, however, the government has introduced reforms aimed at creating a "socialist market economy" and policies have been implemented to allow business enterprises greater autonomy in their operations.  Changes in the political leadership of the PRC may have a significant effect on laws and policies related to the current economic reform programs, other policies affecting business and the general political, economic and social environment in the PRC, including the introduction of measures to control inflation, changes in the rate or method of taxation, the imposition of additional restrictions on currency conversion and remittances abroad, and foreign investment.  Moreover, economic reforms and growth in the PRC have been more successful in certain provinces than in others, and the continuation or increases of such disparities could affect the political or social stability of the PRC.

Although we believe that the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic development of the PRC, the future direction of these economic reforms is uncertain and the uncertainty may decrease the attractiveness of our company as an investment, which may in turn result in a decline in the trading price of our common stock.

We cannot assure you that the current PRC governmental policies of economic reform will continue. Because of this uncertainty, there are significant economic risks associated with doing business in the PRC.

Although the majority of productive assets in the PRC are owned by the Chinese government, in the past several years the government has implemented economic reform measures that emphasize decentralization and encourages private economic activity.  In keeping with these economic reform policies, the PRC has been openly promoting business development in order to bring more business into the PRC.  Because these economic reform measures may be inconsistent or ineffective, there are no assurances that:

· the Chinese government will continue its pursuit of economic reform policies;

· economic policies, even if pursued, will be successful;

· policies will not be significantly altered from time to time; or

· operations in the PRC will not become subject to the risk of nationalization.

We cannot assure you that we will be able to capitalize on these economic reforms, assuming the reforms continue.  Because our business model is dependent upon the continued economic reform and growth in the PRC, any change in Chinese government policy could materially adversely affect our ability to continue to expand our business. The PRC's economy has experienced significant growth in the past decade, but such growth has been uneven across geographic and economic sectors and has recently been slowing.  Even if the Chinese government continues its policies of economic reform, there are no assurances that economic growth in the PRC will continue or that we will be able to take advantage of these opportunities in a fashion that will provide financial benefit to us.

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The PRC government exerts substantial influence over the manner in which our PRC subsidiaries must conduct their business activities.

The PRC only recently has permitted provincial and local economic autonomy and private economic activities.  The government of the PRC has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.  Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions of the PRC, and could require us to divest ourselves of any interest we then hold in our Chinese subsidiaries.

Future inflation in the PRC may inhibit economic activity in the PRC.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation.  During the past 10 years, the rate of inflation in the PRC has been as high as 20.7% and as low as -2.2%.  These factors have led to the adoption by the PRC government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation.  While inflation has been more moderate since 1995, high inflation in the future could cause the PRC government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in the PRC.  Any actions by the PRC government to regulate growth and contain inflation could have the effect of limiting our ability to grow our revenues in future per iods.

Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could interrupt our operations.

A renewed outbreak of SARS or another widespread public health problem in the PRC could have a negative effect on our operations. Our operations may be impacted by a number of health-related factors, including the following:

• quarantines or closures of some of our offices which would severely disrupt our operations;

• the sickness or death of our key management and employees; or

• a general slowdown in the Chinese economy.

An occurrence of any of the foregoing events or other unforeseen consequences of public health problems could result in a loss of revenues in future periods and could impact our ability to conduct the operations of our Chinese subsidiaries as they are presently conducted.  If we were unable to continue the operations of our Chinese subsidiaries as they are now conducted, our revenues in future periods would decline and our ability to continue as a going concern could be in jeopardy.  If we were unable to continue as a going concern, you could lose your entire investment in our company.

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Restrictions on currency exchange may limit our ability to receive and use our revenues effectively. We may not have ready access to cash on deposit in banks in the PRC.

Because a substantial portion of our revenues are in the form of Renminbi (RMB), the main currency used in the PRC, any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside the PRC or to make dividend or other payments in U.S. Dollars.  Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies, after providing valid commercial documents, at those banks authorized to conduct foreign exchange business.  In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to government approval in the PRC, and companies are required to open and maintain separate foreign exchange accounts for capital account items.  We cannot be certain that we could have ready access to the cash should we wish to transfer it to bank accounts outside the PRC nor can we be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions.

We may be unable to enforce our rights due to policies regarding the regulation of foreign investments in the PRC.

The PRC's legal system is a civil law system based on written statutes in which decided legal cases have little value as precedent, unlike the common law system prevalent in the United States.  The PRC does not have a well-developed, consolidated body of laws governing foreign investment enterprises.  As a result, the administration of laws and regulations by government agencies may be subject to considerable discretion and variation, and may be subject to influence by external forces unrelated to the legal merits of a particular matter.  The PRC's regulations and policies with respect to foreign investments are evolving.  Definitive regulations and policies with respect to such matters as the permissible percentage of foreign investment and permissible rates of equity returns have not yet been pub lished.  Statements regarding these evolving policies have been conflicting and any such policies, as administered, are likely to be subject to broad interpretation and discretion and to be modified, perhaps on a case-by-case basis.  The uncertainties regarding such regulations and policies present risks which may affect our current operations and future plans in the PRC.  If we are unable to enforce any legal rights we may have under our contracts or otherwise, our ability to compete with other companies in the steel industry could be limited which could result in a loss of revenue in future periods which could have a material adverse effect on our business, financial condition and results of operations.

Recent regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties that may limit or adversely affect our ability to complete a business combination with PRC companies.

Regulations were issued on November 1, 2005 (SAFE Circular 75), on September 2006 (2006 M&A Rules), and on May 29, 2007 (SAFE Implementation Notice 106), by the PRC State Administration of Foreign Exchange, or SAFE, that will require approvals from, and registrations with, PRC government authorities in connection with direct or indirect offshore investment activities by PRC residents and PRC corporate entities; however, there has been a recent announcement that such regulations may be partially reversed. The SAFE regulations retroactively require approval and registration of direct or indirect investments previously made by PRC residents in offshore companies. In the event that a PRC shareholder with a direct or indirect stake in an offshore parent company fails to obtain the required SAFE approval and make the required registration, the PRC subsidiaries of such offshore parent company may be prohibited from making distributions of profit to the offshore parent and from paying the offshore parent proceeds from any reduction in capital, share transfer or liquidation in respect of the PRC subsidiaries. Further, failure to comply with the various SAFE approval and registration requirements described above, as currently drafted, could result in liability under PRC law for foreign exchange evasion. The regulations discussed could also result in the relevant Chinese government authorities limiting or eliminating our ability to purchase and retain foreign currencies in the future, which could limit or eliminate our ability to pay dividends in the future. More recently, however, new regulations have been drafted that would partially reverse the policy that requires Chinese companies to obtain permission from SAFE to own overseas corporate entities.

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As a result of the lack of implementing rules, the uncertainty as to when the new draft regulations will take effect, and uncertainty concerning the reconciliation of the new regulations with other approval requirements, it remains unclear how these existing regulations, and any future legislation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. We believe that our acquisition of Armco & Metawise complies with the relevant rules. As a result of the foregoing, however, we cannot assure you that we or the former owners of Armco & Metawise or owners of a target business we might acquire, as the case may be, will be able to complete the necessary approval, filings and registrations for a proposed business combination if such approval were required. This may restrict our ability to implement our business combination strategy and adversely affect our operations.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business.  Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC.  We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible.  If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

We may have difficulty establishing adequate management, legal and financial controls in the PRC.

PRC companies have in some cases, been resistant to the adoption of Western styles of management and financial reporting concepts and practices, which include sufficient corporate governance, internal controls and, computer, financial and other control systems.  In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC.  As a result of these factors, we may experience difficulties in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards with future acquisitions.  Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls. Any such d eficiencies, weaknesses or lack of compliance could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to our Securities

Provisions of our articles of incorporation and bylaws may delay or prevent a take-over which may not be in the best interests of our stockholders.

Provisions of our Articles of Incorporation and Bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt.  In addition, certain provisions of the Nevada Revised Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders.  Further, our Articles of Incorporation authorizes the issuance of up to 1,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors in their sole discretion.  Our B oard of Directors may, without stockholder approval, issue series of preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock.

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Our controlling security holders may take actions that conflict with your interests.

All of our officers and directors beneficially own 48.6% of our common stock.  In this case, all of our officers and directors will be able to exercise control over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions, and they will have significant control over our management and policies. The directors elected by these security holders will be able to significantly influence decisions affecting our capital structure. This control may have the effect of delaying or preventing changes in control or changes in management, or limiting the ability of our other security holders to approve transactions that they may deem to be in their best interest. For example, our controlling security holders will be able to con trol the sale or other disposition of our operating businesses and subsidiaries to another entity.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.  The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Annual Report on Form 10-K and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance.  We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results.  A list of factors that could cause our actual results of operations and financial condition to differ materially is set forth below, and these factors are discussed in greater detail under Item 1A – “Risk Factors” of this report.

• We operate in a business that is cyclical and where demand can be volatile.

• Our dependence on adequate supply and availability of raw materials.

• The principal markets we serve are highly competitive.

• Our customers’ inability to fulfill their contractual obligations during uncertain economic conditions.

• Loss of order volumes from any of our major customers could result in a significant decline in our sales and our cash flows may be reduced.

• Equipment upgrades and equipment failures may lead to production curtailments or shutdowns.

• Our need for additional financing to fund expansion of our recycling facility and working capital for our metal ore business and the potentially dilutive effects of those activities.

• Our ability to manage growth in operations to maximize our potential growth and achieve our expected revenues.

• The lack various legal protections in certain agreements to which we are a party and which are material to our operations which are customarily contained in similar contracts prepared in the United States.

• Our dependence on our key management personnel.

• The effect of changes resulting from the political and economic policies of the Chinese government on our assets and operations located in the PRC.

• The influence of the Chinese government over the manner in which our Chinese subsidiaries must conduct our business activities.

• The impact on future inflation in the PRC on economic activity in the PRC.

• The impact of any recurrence of severe acute respiratory syndrome, or SAR’s, or another widespread public health problem.

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• The limitation on our ability to receive and use our revenues effectively as a result of restrictions on currency exchange in the PRC.

• Our ability to enforce our rights due to policies regarding the regulation of foreign investments in the PRC.

• The restrictions imposed under recent regulations relating to offshore investment activities by Chinese residents and the increased administrative burden we face and the creation of regulatory uncertainties that may limit or adversely affect our ability to complete the business combination with our PRC based subsidiaries.

• Our ability to comply with the United States Foreign Corrupt Practices Act which could subject us to penalties and other adverse consequences.

• Our ability to establish adequate management, legal and financial controls in the PRC.

• The provisions of our articles of incorporation and bylaws which may delay or prevent a takeover which may not be in the best interests of our shareholders.

• Our controlling stockholders may take actions that conflict with your interests.

We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to w hich any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not applicable to a smaller reporting company

ITEM 2.  PROPERTIES

Our principal executive offices in the U.S. are located at One Waters Park Drive, Suite 98, San Mateo, CA 94403.  We pay rent of $1,000.00 per month to occupy a portion of this 905 square foot office pursuant to a sublease agreement with Prime Armet Group, Inc., a company owned by Kexuan Yao, our Chief Executive Officer.  The sublease for this office expires on September 30, 2012.

Our subsidiaries Henan Armco and certain administrative functions of Armet Lianyungang operate from offices located in Zhengzhou, within the Henan Province of the PRC.  The office space consists of three suites with approximately 5,611 square feet in total.  Henan Armco owns two suites with approximately 3,713 square feet and leases another suite with approximately 1,898 square feet from Mr. Yao our Chief Executive Officer pursuant to a lease that expires on December 31, 2011.  The monthly rent is approximately $1,462, due on the last day of the previous month.

Our subsidiary Armet Lianyungang performs certain operational functions from offices located in Lianyungang, of the Jiangsu province in the PRC.  Armet Lianyungang leased approximately 3,229 square feet of office space at an annual cost of approximately $12,427. We terminated this lease in December 2009 and moved our scrap metal recycling administrative offices to our recently completed recycling facility and administration building located in Lianyungang.

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Armet Lianyungang has acquired land use rights for approximately 32 acres of land located in Lianyungang at a cost of approximately $2.25 million according to the land use right acquirement agreement dated September 28, 2007.  The land use rights allow for industrial production pursuant to a land use rights certificate we obtained in November 2007.  The land use rights expire in 2057.  We occupy a 14,779 square foot building which we constructed on this land that houses our scrap metal recycling administrative offices and an employee dormitory.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings and, to our knowledge, none of our officers, directors or principal shareholders are party to any legal proceeding in which they have an interest adverse  to us.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of February 10, 2010 our common stock has been traded on the NYSE Amex LLC under the symbol “CNAM”.  Prior to February 10, 2010 our common stock was quoted on the OTC Bulletin Board under the symbol “CNAM” from May 29, 2008 to February 9, 2010.  The following table sets forth the reported high and low closing prices for our common stock as reported on the OTC Bulletin Board, for the periods indicated below. Our common stock was very thinly traded until August 2009.  Accordingly, the prices presented below may reflect a limited number of closing prices during the periods indicated.  In addition, these prices below do not include retail mark-ups, markdowns or commissions, and may not necessarily represent actual transactions.

	High		Low
May 29, 2008 to June 30, 2008	$	7.00	$	7.00
July 1, 2008 to September 30, 2008	$	7.00	$	6.00
October 1, 2008 to December 31, 2008	$	3.50	$	2.50
January 1, 2009 to March 31, 2009	$	3.00	$	2.25
April 1, 2009 to June 30, 2009	$	2.40	$	0.32
July 1, 2009 to September 30, 2009	$	3.60	$	0.85
October 1, 2009 to December 31, 2009	$	3.40	$	2.75

Holders of Our Common Stock

As of March 29, 2010, there were approximately 58 shareholders of record of our common stock.

Dividend Policy

We have not declared any cash dividends on our common stock since we completed the purchase of Armco & Metawise in June 2008. Under Nevada law, we are prohibited from paying dividends if the distribution would result in our company not be able to pay its debts as they become due in the usual course of business or if our total assets would be less than the sum of our total liabilities plus the amount that would be needed, we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution.  Our board of directors will make any future decisions regarding dividends. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate payi ng any cash dividends in the near future. Our board of directors has complete discretion on whether to pay dividends, subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

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Recent Sales of Unregistered Securities

None.

ITEM 6.                      SELECTED FINANCIAL DATA

Not applicable to a smaller reporting company.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our consolidated financial condition and results of operations for the years ended December 31, 2009 and 2008 should be read in conjunction with the consolidated financial statements, including footnotes, and other information presented elsewhere in this Form 10-K. The year ended December 31, 2009 is referred to as “2009”, the year ended December 31, 2008 is referred to as “2008”, and the coming year which will end December 31, 2010 is referred to as “2010”.

Restatement

We restated our March 31, 2009, June 30, 2009, and September 30, 2009 unaudited consolidated financial statements included in our Form 10-Q’s filed on May 20, 2009, August 14, 2009, and November 25, 2009, respectively to correct an error in the classification and valuation of common stock purchase warrants as a derivative liability.  The aggregate change in the fair value of the associated liability for all of the periods included in the year ended December 31, 2009 totaled ($166,025).  The impact of the restatement on our March 31, 2009, June 30, 2009, and September 30, 2009 unaudited consolidated financial statements is discussed in Note 3 - Restatement of Financial Statements Included in Previously Filed Interim Reports of the notes to the consolidated financial statements included in this report.  All inform ation included in our financial statements for the year ended December 31, 2009 and included in Management’s Discussion and Analysis of Results of Operations and Financial Condition has been correspondingly corrected to give effect to such restatement.

OVERVIEW OF OUR PERFORMANCE AND OPERATIONS

Our Business and Recent Developments

We import, sell and distribute to the metal refinery industry in the PRC a variety of metal ore which includes iron, chrome, nickel, copper and manganese ore as well as non-ferrous metals, scrap metal and coal.  We obtain these raw materials from global suppliers in Brazil, India, South America, Oman, Turkey, Nigeria, Indonesia, and the Philippines and distribute them in the PRC.  Domestic steel production in the PRC has rebounded in response to Chinese government incentives and investment in infrastructure and as signs of recovery from the global economic slowdown has allowed our customers to begin to ramp-up operations to pre-economic slowdown levels.

We believe scrap metal recycling will become a strong growth driver worldwide as natural resources continue to be depleted and larger amounts of unprocessed scrap metal becomes available as a result of increases in consumer demand for products made from steel that eventually are recycled.  We recently completed constructing a scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in the Jiangsu province of the PRC in the first quarter of 2010. This facility will recycle automobiles, machinery, building materials, dismantled ships and various other scrap metals.  We will sell and distribute the recycled scrap metal to the metal refinery industry in the PRC utilizing our existing network of metal ore customers.

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We have invested a total of approximately $25.6 million for acquiring land use rights, construction and equipment purchases for the first phase of our scrap metal recycling facility. These capital expenditures were derived from a portion of the net proceeds from our 2008 offering and debt and vendor financing. We began recycling operations at this facility in March 2010 and anticipate that we will report meaningful revenues from its operations in the second quarter of 2010.

We made a significant achievement in our continuing efforts to secure financing for our business in 2009. We secured four bank facilities which provide for the issuance of commercial letters of credit in the aggregate amount of $44 million and have issued an aggregate of $16.9 million in letters of credit or borrowings under these letter of credit facilities in connection with agreements we enter into for the purchase of metal ore which we resell leaving $27.1 million available for issuance of letters of credit. After our common stock began trading on the NYSE Amex on February 10, 2010 under the ticker symbol "CNAM" investors exercised 1,310,346 warrants to purchase our common stock at an exercise price of $5.00 per share resulting in proceeds to us of $6,551,730 and 167,740 warrants were exercised on a cashless basis resulting in the is suance of 76,679 shares of our common stock in March 2010.

We believe that we are positioned to raise additional working capital to finance our continued expansion.

 Our Performance

During 2009, our net revenues increased 57.0% over 2008. Our gross profit as a percentage of revenues also increased during 2009 to 10.2% compared to 7.5% during 2008.  Our performance during the four quarters of 2009 reveals the variable nature of our gross profit margins in our trading business; during the current year, our gross profit margin as a percentage of revenues began at 10% for the first quarter of 2009, then increased to 18% for the second quarter of 2009, and then decreased to 4% for the third quarter of 2009 and increased to 16% for the fourth quarter of 2009. These fluctuations are attributable to variations in market prices of the ore and metals we sell.  Our net income increased $1.8 million during 2009 due to returning market demand for our products.   Our total assets at December 31, 2009 increased 106% in comparison to December 31, 2008, which was mainly due to the short-term increase of inventory resulting from the cut-off of the year end and our investment in constructing our scrap metal recycling facility.

In addition to our long term borrowings of $8.8 million for our scrap metal recycling facility, we borrowed $16.9 million as of the end of 2009 from banks in the PRC on a short term basis to finance the purchase of inventory on which we have executed contracts to resell.  These borrowings are secured by the inventory we purchase and the contracts for their sale, and are repaid upon receipt of payment from our customers.  In addition, our accounts receivable increased $11.7 million mainly due to extension of credit terms given to our customers. Inventories increased $299,000 and accounts payable increased approximately $147,000 at December 30, 2009 from December 31, 2008 due to timing differences between our receipt of product, shipment to our customers, and payment to our vendors.

Our Outlook

Our performance during 2009 showed increased sales and a higher gross margin in comparison to 2008 as we were able to overcome a challenging first year.  We have witnessed a rebound in stronger demand for our products our revenue which we believe is evidence of a continuing global economic recovery and increased domestic economic activity in the PRC stemming from government domestic economic stimulus programs.  

Metal Ore Trading. The metals markets have witnessed a significant rebound in pricing during the second quarter of 2009 followed by a leveling off during the third and fourth quarters of 2009. In both market situations, we have experienced an increase in trading volumes and the trading business has been more active through the last three quarters of 2009.  We achieved sales increases quarter-over-quarter in in 2009 with sales of $5.4 million, $22.5 million, $27.3 million, and $31.7 million in the first, second, third, and fourth quarters of 2009, respectively.  In addition, in March 2010 we entered into a contract to purchase 749,000 metric tons of Brazilian manganese ore over the next 16 months which could result in sales of up to $180 million over th e contract period based on current market prices for manganese ore of this type.

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We have seen high demand for manganese ore as the steel industry in the PRC has continued to rebound in 2010.  This demand has created a significant market for manganese ore which is used in the production of iron-manganese alloys used in the steel industry and the production of non-ferrous alloys with aluminum, magnesium, copper, nickel and zinc. In the production of steel, the presence of the manganese is essential for sulfur control, and, in special steels, for the control of carbon and phosphorus.   

Based on current operations and market conditions, we expect to achieve revenues exceeding $220 million and net income exceeding $12 million in 2010.

Scrap Metal Recycling. We completed the first phase of our recycling facility in Lianyungang and began recycling operations in this facility in March 2010.  We entered into a scrap metal sales contract in March 2010 with a China steel producer to sell 23,000 tons of a mixture of scrap metal, crushed aggregates, charging materials and heavy scrap.  This contract calls for delivery of these materials over a 10 month period beginning in March 2010 following our receipt of a monthly order from the buyer with pricing and terms determined on the 25th of each month to calculate the following month’s unit price per ton.  We expect revenues of over $100 million from this contract.

Due to efforts to improve our performance and operate more efficiently, we now see our company in the position to capitalize on trading opportunities as a global economic recovery emerges and we begin production of processed scrap metal at our recycling facility.  As demand increases for metal ore and scrap metal, we are faced with challenges in securing new and reliable sources of the products we resell and process

RESULTS OF OPERATIONS

The table below summarizes the consolidated operating results for 2009 and 2008.  The percentages represent each line item as an approximate percentage of net revenues unless otherwise noted.

	For the Years Ended December 31,
	2009				2008				$ Change		% Change
Net revenues	$	86,939,841			$	55,358,567			$	31,581,274		57	%
Cost of goods sold		77,995,219	90	%		51,226,667	93	%		26,798,552		52	%
Gross profit		8,944,622	10	%		4,131,900	7	%		4,812,722		116	%
Total operating expenses		1,711,009	2	%		1,250,804	2	%		460,205		37	%
Operating  income		7,233,614	8	%		2,881,096	5	%		4,352,518		151	%

Net Revenues

Net revenues of $86.9 million in 2009 increased $31.6 million compared to 2008 primarily due to $28.8 million increase in net revenues from the sales of iron ore, $8.6 million increase in net revenues from iron pellets, a $8.3 million increase in net revenues from sales of chrome ore, and an $3.5 million increase in net revenues from magnesium, partially offset by a decrease in sales of steel billet of $15.1 million.  The products we buy and sell are subject to change and are dependent upon availability of supply and the demands of our customers.

Cost of Goods Sold

Cost of goods sold includes the cost of the products we purchase from our vendors and shipping and handling costs on shipments to our customers. Cost of goods of $78.0 million increased $26.8 million compared to 2008 primarily due to the $31.6 million increase in net revenues, partially offset by in improvement in gross margins which increased to 10.3% in 2009 from 7.5% in 2008 due primarily to improved gross margins for sales of chrome ore and magnesium.  Our gross margin for chrome ore increased to 45.4% during 2009 from a gross margin loss of 12.9% during 2008.  In addition, we added magnesium as an additional product in 2009 and sales of this product were made at a gross margin of 13.8%.

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Total Operating Expenses

Operating expenses of $1.7 million in 2009 increased by $460,000, or 37%, compared to 2008 due to an increase in both selling expenses and general and administrative expenses.  Selling expenses include commissions, salaries, and travel for the sales agents.  Selling expenses increased by $326,000 mainly due to higher commissions paid on increased sales, a larger sales staff, and higher salaries needed to retain personnel. General and administrative expenses include salaries, professional fees including legal and accounting fees, and office expenses. Our general and administrative costs increased by $135,000 in 2009 as compared to 2008 primarily due to an increase of $235,000 in salaries and partially offset by a decrease of $98,000 in professional fees . General and administrative expenses as a percentage of net reven ues decreased to 1.5% for 2009 as compared to at 2.0% for 2008 primarily due to a $31.6 million increase in our net revenues in 2009.

Total Other (Income) Expense

Total other expense of $897,000 in 2009 increased $2.1 million from total other income of $1.2 million in 2008 primarily due to the absence of a one-time gain of $1.2 million related to a contract termination we recognized during the second quarter of 2008.  Other expense increased $462,000 primarily due to a $170,000 increase in bank charges related to the issuance of letters of credit required under the increased value of our contracts to purchase the metal ore we resell and the absence of a miscellaneous income item of $253,000 related to forgiveness of certain outstanding payables recognized in 2008.  Interest expense also increased $362,000 in 2009 due to higher interest expense associated with the $25.7 million debt obligations we have incurred in connection with borrowings to finance metal ore purchases and construc tion and equipment purchases for our scrap metal recycling facility.  In 2009 we recognized a $166,000 loss on the change in fair value of derivative liability; this non-cash loss is a result of the change in fair value of a derivative liability related to common stock purchase warrants that are not considered indexed to our stock and require fair value derivative accounting treatment.  The loss is a result of the change in the fair value of the common stock purchase warrants from $3,251,949 at January 1, 2009 to $3,417,974 at December 31, 2009.  These increases in expenses were partially offset by an increase in government subsidy income of $52,000, which represents PRC government stimulus initiatives which began in 2009.

Income Tax Expense

Income tax expense of $1.2 million in 2009 increased by $424,000 compared to 2008 primarily due to an income tax accrual of $1.2 million for income taxes on the operations of our Hong Kong subsidiary during 2009 and an increase of $2.3 million in net income from continuing operations before taxes.

Net Income (Loss)

Net income of $5.1 million in 2009 increased $1.8 million or 54% compared to 2008 due to an increase in net revenues of $31.6 million, a higher gross profit of 10.3% and operating expense and other expense at 3% of net revenues.

Comprehensive Income

During 2009 our comprehensive income amounted to $5.0 million.  Comprehensive income consists of our net income and foreign currency translation gain (loss).   The functional currency of three of our subsidiaries operating in the PRC is the Chinese yuan or RMB. The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations.  As a result of these translations, we reported a foreign currency translation loss of $71,521 for 2009 and a gain of $292,544 for 2008. These non-cash losses and gains ha d the effect of decreasing our reported comprehensive income 2009 and increasing our reported comprehensive income for 2008.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate adequate amounts of cash to meet its cash needs.

At December 31, 2009 and December 31, 2008 we had cash and cash equivalents of $743,810 and $3.3 million, respectively.  At December 31, 2009 our working capital was $5.3 million as compared to $10.7 million at December 31, 2008.

Our principal future uses of funds are for working capital requirements, including purchases of metal ore and scrap metal, capital expenditures and debt service. We have historically financed our working capital needs primarily through sales of our common stock and warrants, internally generated funds and debt financing. We collect cash from our customers based on our sales to them and their respective payment terms.

We believe our working capital is sufficient for our operations for at least the next 12 months.

As of March 30, 2010, investors holding the Company’s common stock purchase warrants exercised 167,740 warrants on a cashless basis resulting in the issuance of 76,679 shares of the Company’s common stock and exercised 1,310,346 warrants on a cash basis at an exercise price of $5.00 per warrant resulting in proceeds to the Company of $6.5 million.  As of March 30, 2010 1,250,828 common stock purchase warrants remain outstanding.

We have a RMB 70 million (equivalent to $10.2 million at December 31, 2009) line of credit facility (“Line of Credit”) with the Bank of China that we entered into on September 3, 2009.  The proceeds from the Line of Credit are designated for property, plant and equipment expenditures related to our scrap metal recycling facility and is secured by these assets in addition to our land use right on which this facility was constructed.  The Line of Credit expires on September 3, 2012.  As of December 31, 2009, we drew RMB 60 million (equivalent to U.S. $8.8 million) of the Line of Credit with RMB 10 million (equivalent to U.S. $1.5 million at December 31, 2009) remaining available to us.  Interest is paid quarterly with principal payments of RMB 15 million (equivalent to U.S. $2,193,881) du e on May 15, 2010, RMB 30 million (equivalent to U.S. $4.4 million) due on August 25, 2011, and the remaining principal drawn up to RMB 25 million (equivalent to U.S. $3.7 million) due on August 25, 2012.

We have four bank facilities which provide for the issuance of commercial letters of credit in the aggregate amount of $44.0 million. We have issued an aggregate of $16.9 million in letters of credit or borrowings under these letter of credit facilities in connection with agreements we enter into for the purchase of metal ore which we resell leaving $27.1 million available for issuance of letters of credit.  The following is a summary of each letter of credit facility.

Our wholly owned subsidiary, Armco & Metawise (H.K.) Limited, entered into an uncommitted Trade Finance Facility with RZB Austria Finance (Hong Kong) Limited on March 25, 2009 for $10.0 million for issuance of commercial letters of credit in connection with our purchase of metal ore.  At December 31, 2009, we had $12.3 million in borrowings or commitments under this credit facility. Our lender orally agreed to increase the amounts under this credit facility on a case by case basis. We pay interest on issued letters of credit at the rate of 250 basis points per annum plus the lender’s cost of funds before letter of credit acceptance and 200 basis points per annum after acceptance in addition to nominal fees upon issuance of the letter of credit.  Amounts advanced under this facility are repaid from the procee ds on the sale of metal ore upon completion of the sale.  This facility matures on May 31, 2010.  The lender may, however, terminate the facility at anytime or at its sole discretion upon the occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidity in the funding market. The lender has the sole discretion to decide whether or not such event has occurred.  The facility is secured by restricted cash deposits held by Raiffeisen Zentralbank Oesterreich AG Beijing Branch, the personal guarantee of Mr. Kexuan Yao and a security interest in the contract for the purchase of the ore for which the letter of credit has been issued and the contract for the sale of the ore.  We were in compliance with all applicable covenants under this facility for the year ended December 31, 2009.

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Our wholly owned subsidiary, Armco & Metawise (H.K.) Limited, entered into an Banking Facilities Agreement with DBS Bank (Hong Kong) Limited on April 22, 2009 for $12,000,000 for issuance of commercial letters of credit in connection with our purchase of metal ore.  At December 31, 2009, we had $0 in borrowings or commitments under this credit facility.  We pay interest on issued letters of credit at the rate of 2.75% per annum over LIBOR or DBS Bank’s cost of funds plus an export bill collection commission equal to 1/8% of the first $50,000 and 1/16% of the balance and an opening commission of ¼% on the first $50,000 and 1/16% of the balance.  Amounts advanced under this facility are repaid from the proceeds on the sale of metal ore upon completion of the sale.  This facility mature s on May 16, 2010.  The lender may, however, terminate the facility at anytime in its sole discretion. The facility is secured by the borrowers restricted cash deposit in the minimum amount of 5% of the letter of credit amount, our guarantee, the guarantee of Mr. Kexuan Yao and a security interest in the contract for the purchase of the ore for which the letter of credit has been issued and the contract for the sale of the ore.  We were in compliance with all applicable covenants under this facility for the year ended December 31, 2009.

Our wholly owned subsidiary, Armco & Metawise (H.K.) Limited, obtained a RMB 50.0 million (equivalent to U.S. $7,312,937) line of credit from Guangdong Development Bank Zhengzhou Branch in October 2009 for letters of credit issued to finance the purchase of metal ore which we resell.  The letters of credit require us to pledge cash equal to 20% of the letter of credit, subject to increase by the lender in the event of price fluctuations and market demand during the period of time that the letter of credit remains open.  At December 31, 2009, we had RMB 31.4 million (equivalent to U.S. $4,598,081) in borrowings or commitments under this line of credit.  We pay interest on issued letters of credit at variable rates determined by the lender at the time the loan is made.  Amounts advanced under thi s line of credit are repaid from the proceeds on the sale of metal ore upon completion of the sale.  This facility matures in October 2010.  We were in compliance with all applicable covenants under this facility for the year ended December 31, 2009.

Our wholly owned subsidiary, Armco & Metawise (H.K.) Limited, obtained a $15 million line of credit from ING Bank Hong Kong Branch on December 8, 2009 for letters of credit issued to finance the purchase of metal ore which we resell.  The letters of credit require us to pledge cash equal to 5% of the letter of credit, subject to increase by the lender in the event of price fluctuations and market demand during the period of time that the letter of credit remains open.  At December 31, 2009, we had $0 in borrowings or commitments under this line of credit.  We pay interest on issued letters of credit at the rate of 250 basis points per annum plus the lender’s cost of funds plus an export bill collection commission equal to 1/4% of the first $50,000 and 1/16% of the balance.  Amounts advanc ed under this line of credit are repaid from the proceeds on the sale of metal ore upon completion of the sale.  This facility matures on December 31, 2010.  We were in compliance with all applicable covenants under this facility for the year ended December 31, 2009.

Substantially all of our cash reserves at December 31, 2009, are held in the form of RMB held in bank accounts at financial institutions located in the PRC. Cash held in banks in the PRC is not insured. In 1996, the Chinese government introduced regulations which relaxed restrictions on the conversion of the RMB; however restrictions still remain, including, but not limited to, restrictions on foreign invested entities.  Foreign invested entities may only buy, sell or remit foreign currencies after providing valid commercial documents at only those banks authorized to conduct foreign exchanges.  Furthermore, the conversion of RMB for capital account items, including direct investments and loans, is subject to PRC government approval.  Chinese entities are required to establish and maintain separate fore ign exchange accounts for capital account items.  We cannot be certain Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions.  Accordingly, cash on deposit in banks in the PRC is not readily deployable by us for purposes outside of the PRC.

Our current assets at December 31, 2009 increased 56.1% from December 31, 2008; this reflects increases in current asset items including accounts receivable, net of $11.7 million, prepayments, other current assets of $3.1 million, pledged deposits of $780,000, inventories of $299,000, and advances on purchases of $223,000. These increases were partially offset by a decrease in cash of $2.5 million.

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Pledged deposits at December 31, 2009 represent deposits with financial institutions as collateral to letters of credit we provide to suppliers for the purchase of inventories.  The amounts will be released to pay vendors upon acceptance of goods.  We did not have any pledged deposits as of December 31, 2008.

Our accounts receivable, net of allowance for doubtful accounts, increased $11.7 million at December 31, 2009 from December 31, 2008 mainly due to $6.6 million sale near the end of the year and extension of credit terms given to a customer based upon market conditions.

Inventories increased $496,000 at December 31, 2009 from December 31, 2008 mainly due to timing differences between our receipt of product and shipment to our customers.  We hold inventory for short periods of time, in situations where our customer has not accepted the shipment or delays in shipment occur.

Advances on purchases increased 223,000 at December 31, 2009 from December 31, 2008, and consisted of prepayments to vendors for merchandise and deposits on pending purchases.  These advances on purchases are customary in our business and help us secure inventory below prevailing market prices, thereby providing us with a better opportunity to increase our gross profit margins. 

Our prepayment and other current assets increased $3.1 million at December 31, 2009 compared to December 31, 2008 primarily due to prepayments and deposits for start-up costs and deposits related to our scrap metal recycling operation which began operations in the first quarter of 2010.  The prepayments include a $1.5 million guarantee deposit to the recycling equipment vendor and $2.2 million in prepaid expenses related to the recycling facility.   This is an increase from prepaid expenses related to the recycling facility of $150,000 and prepaid expenses related to the trading business of $230,000 at December 31, 2008.

Our current liabilities increased $19.0 million at December 31, 2009 from December 31, 2008, which reflects increases in loans payable of $14.1 million, current maturities of long-term debt of $2.2 million, accounts payable of $147,000, corporate income tax payable of $1.2 million, value added tax and other taxes payable of $1.1 and accrued expenses and other current liabilities of $622,000.  These increases were partially offset by decreases in advances from stockholder of $201,000, and customer deposits of $161,000..

Loans payable increased $14.1 million at December 31, 2009 compared to December 31, 2008 primarily due to an increase in short-term borrowings under our letter of credit facilities in the fourth quarter of 2009 to finance inventory purchases.  The short-term borrowings in the fourth quarter of 2009 carry interest rates ranging from 3.3% to 6.3%.

Current maturities of long-term debt increased $2.2 million at December 31, 2009 compared to $0 at December 31, 2008 due to a principal payments from of Bank of China line of credit of RMB 15 million (equivalent to U.S. $2,193,881) due on May 15, 2010.

Corporate income tax payable increased $1.2 million at December 31, 2009 from December 31, 2008 primarily due to increases in net income.

Value added taxes and other taxes payable increased $1.1 million compared to December 31, 2008 due to timing of payments and offsets of our value added tax liability.

At December 31, 2008 we owed our Chairman and CEO, Mr. Kexuan Yao, $35,000 for funds he advanced to us for working capital purposes, $201,000 of these advances were repaid during 2009.

Customer deposits decreased $160,000 at December 31, 2009 compared to December 31, 2008.  This decrease is due to timing of customer orders and amounts that we require for deposits.  We recognize customer deposits as revenue when the goods have been delivered and risk of loss has transferred to the customer either at the port of origin or port of destination based on the shipping terms we agree to with our customer.

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Accrued expenses and other current liabilities increased $622,000 at December 31, 2009 from December 31, 2008.  Accrued expenses consist of accrued expenses and other payables related to shipping fees.  These expenses are due to timing differences of shipments and payments of our payables as compared to 2008.

We do not have any commitments for capital expenditures at December 31, 2009.  As of December 31, 2009, since inception we have invested a total of $25.6 million for the acquisition of land use rights, construction and equipment purchases for the first phase of our scrap metal recycling facility. While we expect to expand the production capacity of our recycling facility, we have not set a timeframe for this expansion.  Also, we have not determined how we plan to finance this future expansion and unless we can obtain additional financing, we will be unable to complete construction of additional phases of our scrap steel recycling facility. There is no assurance, however, that we will be successful in obtaining the additional financing that we require for additional phases or that such financing may not be on terms dee med to be desirable to our management. Furthermore, in the event we are successful, there is no assurance that such investment will result in enhanced operating performance.

Statements of Cash Flows

Our cash decreased $2.5 million during 2009 as compared to an increase of $3.0 million during 2008. In 2009 we used cash in the amounts of $6.9 million in operating activities and $18.1 million in investing activities and we were provided cash in the amount of $22.6 million through financing activities. In 2008 we used cash in the amount of $3.8 in operating activities and $1.7 million in investing activities, and were provided cash in the amount of $8.5 million through financing activities.

Net Cash Provided by (Used in) Operating Activities

In 2009, net cash used in operating activities of $6.9 million was mainly comprised of outflows related to an increase in accounts receivable of $11.6 million, and an increase in prepayments of $3.1 million.  These outflows were partially offset by cash provided by our net income adjusted for $298,000 of non-cash items of $4.8 million, and cash provided by an increase in taxes payable of $2.3 million.

In 2008 cash used in operations of $3.8 million included an increase in accounts receivables of $15.5 million due primarily to longer payment terms extended to clients during the year ended December 31, 2008, an increase in advances on purchases of $1.7 million and an increase in prepayments and other current assets of $260,000. These outflows were partially offset by our net income for the year of $3.3 million, an increase in accounts payables of $6.4 million, a decrease in inventory levels of $2.4 million, and taxes payable of $1.2 million.

Cash Used in Investing Activities

In 2009 cash used in investing activities of $18.1 million was due to purchases of property and equipment associated with our recycling facility construction of $17.3 million and payments made towards pledged deposits of $779,000.

In 2008 cash used in investing activities of $1.7 million was mainly due to purchases of property, plant and equipment of $2.3 million.  The decreases were offset by releases of pledged deposits of $603,187.

Cash Provided by Financing Activities

In 2009 cash provided in financing activities of $22.6 million consisted of proceeds from short-term loans of $19.1 million used to finance the purchase of inventories, proceeds from long-term debt of $8.8 million for property, plant and equipment purchases related to our scrap metal recycling facility, partially offset by repayments of short-term loan payable of $5.0 million, and payments to related parties of $313,000.

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In 2008 cash provided by financing activities of $8.5 million was due to proceeds from loans of $2.9 million, proceeds from equity financing of $6.6 million, net of offering cost, offset by payments of $343,023 of forward foreign exchange contracts and payment of $710,041 due to Mr. Kexuan Yao, our Chairman and Chief Executive Officer.

Off Balance Sheet Arrangements

Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:

		Any obligation under certain guarantee contracts;
		Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets;
		Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in stockholder’s equity in our statement of financial position; and
		Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

Contractual Obligations and Commitments.At December 31, 2009, our long-term debt and financial obligations and commitments by due dates were as follows:

	Payments due by period
Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations(1)		8,775,522		2,193,881		4,387,761		2,193,880		-
Short-Term Loans Payable (2)		17,021,558		17,021,558
Capital Lease Obligations		-		-		-		-		-
Operating Lease Obligations		68,088		29,544		38,544		-		-
Purchase Obligations		-
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP		-		-		-		-		-
Total		25,865,168		19,244,983		4,426,305		2,193,880		-

(1)	See Note 10 – Long-Term Debt in our audited consolidated financial statements included in this report.
(2)	See Note 8 – Loans Payable in our audited consolidated financial statements included in this report.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or c onditions.

A summary of significant accounting policies is included in Note 2 to the consolidated financial statements included in this report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

Recently Issued Accounting Pronouncements

In June 2009, the FASB approved the “FASB Accounting Standards Codification” (the “Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009.  The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place.  All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. The Codification is effective for interim and annual periods ending after September 15, 2009.

- 29 -

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-05 “Fair Value Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair Value”, which provides amendments to subtopic 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities.  This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1. A valuation technique that uses: a. The quoted price of the identical liability when traded as an asset b. Quoted prices for similar liabilities or similar liabilities when traded as a ssets. 2. Another valuation technique that is consistent with the principles of topic 820; two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this update also clarify that both a quoted price in an active market for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements.  The Company does not expect the adoption of this update to have a material impact o n its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 “Earnings Per Share – Amendments to Section 260-10-S99”,which represents technical corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock. The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-01 “Equity Topic 505 – Accounting for Distributions to Shareholders with Components of Stock and Cash”, which clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share (“EPS”)).  Those distributions should be accounted for and included in EPS calculations in accordance with paragraphs 480-10-25- 14 and 260-10-45-45 t hrough 45-47 of the FASB Accounting Standards codification.  The amendments in this Update also provide a technical correction to the Accounting Standards Codification.  The correction moves guidance that was previously included in the Overview and Background Section to the definition of a stock dividend in the Master Glossary.  That guidance indicates that a stock dividend takes nothing from the property of the corporation and adds nothing to the interests of the stockholders.  It also indicates that the proportional interest of each shareholder remains the same, and is a key factor to consider in determining whether a distribution is a stock dividend.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements are contained in pages F-1 through F- 39 which appear at the end of this annual report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

- 30 -

ITEM 9A (T) CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, CFO, to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2009. Based on that evaluation and as described below under “ ;Management’s Report on Internal Control over Financial Reporting,” we have identified material weaknesses in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)). These weaknesses involve our lack of internal control over financial reporting related to our failure to properly record our common stock purchase warrants as a derivative liability rather than equity that caused us to restate our consolidated financial statements for the periods ended March 31, 2009, June 30, 2009 and September 30, 2009. These weaknesses are described in more detail in the next section. Solely as a result of these material weaknesses, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of December 31, 2009.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that, due to the material weaknesses described below, our internal control over financial reporting was not effective as of December 31, 2009.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements would not be prevented or detected on a timely basis.

The specific material weaknesses identified by our management was our lack of internal control over financial reporting related to our failure to properly record our common stock purchase warrants as a derivative liability rather than equity at January 1, 2009 upon our adoption of Derivative and Hedging Topic of the FASB ASC 815 and properly record the subsequent accounting for the changes in the fair value of the associated liability at March 31, 2009, June 30, 2009, and September 30, 2009.

Remediation of Material Weakness in Internal Control

We believe the following actions we have taken and are taking will be sufficient to remediate the material weaknesses described above:

• We have implemented an internal review process over financial reporting to review all recent accounting pronouncements and verify that the accounting treatment indentified in such report have been fully implemented and confirmed by our independent registered public accountants.

Management believes the actions described above have remediated the material weaknesses we have identified and strengthen our internal control over financial reporting.

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

- 31 -

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in connection with the evaluation of our controls performed during the quarter ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None

- 32 -

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item will be contained in our Proxy Statement relation to the 2009 Annual Meeting of Shareholders to be filed within 120 days after the end of our fiscal year ended December 31, 2009 and is incorporated herein by this reference or included in Part I under “Executive Officers of the Company.”

ITEM 11.   EXECUTIVE COMPENSATION.

The information required by this item will be contained in our Proxy Statement and is incorporated herein by this reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this item will be contained in our Proxy Statement and is incorporated herein by this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by this item will be contained in our Proxy Statement and is incorporated herein by this reference.

.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item will be contained in our Proxy Statement and is incorporated herein by this reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit			Filed
Index		Description of Document	Herewith	Previously Filed	Incorporated by Reference To:
	2.1	Share Purchase Agreement between Cox Distributing, Inc. and Armco & Metawise (HK), Ltd., dated June 27, 2008.			Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on July 1, 2008.
	3.1	Articles of Incorporation of the Registrant as filed with the Secretary of State of Nevada.			Exhibits 3.1 to the Registrant’s Registration Statement on Form SB-2 filed on August 27, 2007.
	3.2	Bylaws of the registrant.			Exhibit 3.2 to the Registrant’s Registration Statement on Form SB-2 filed on August 27, 2007.
	4.1	Form of Warrant			Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on July 31, 2008.
	10.1	Stock Option Agreement between Cox Distributing, Inc. and Feng Gao dated June 27, 2008			Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on July 1, 2008.
	10.2	Call Option Agreement between Kexuan Yao and Feng Gao, dated June 27, 2008			Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed on July 1, 2008.
	10.3	Exclusive Consulting Agreement between Armco & Metawise (HK) Ltd. and Henan Armco & Metawise Trading Co., Ltd. dated June 27, 2008.			Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed on July 1, 2008.
	10.4	Exclusive Consulting Agreement between Armco & Metawise (HK) Ltd. and Armet (Lianyungang) Scraps Co., Ltd. dated June 27, 2008.			Exhibit 10.8 to the Registrant’s Current Report on Form 8-K filed on July 1, 2008.
	10.5	Consulting Agreement between Stephen E. Cox (“Client”), and Capital Once Resource Co., Ltd. dated June 27, 2008			Exhibit 10.9 to the Registrant’s Current Report on Form 8-K filed on July 1, 2008.
	10.6	Services Agreement between Stephen D. Cox Supply and Cox Distributing, Inc. dated June 27, 2008.			Exhibit 10.10 to the Registrant’s Current Report on Form 8-K filed on July 1, 2008.

10.7	Form of Subscription Agreement			Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 31, 2008.
10.8	Form of Regulation S Subscription Agreement			Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on July 31, 2008.
10.9	Cancellation Agreement with Feng Gao			Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 filed on September 11, 2008.
10.10	Employment Agreement with Mr. Kexuan Yao dated December 18, 2008			Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 13, 2009
10.11	Amendment to Call Option between Mr. Kexuan Yao and Ms. Feng Gao dated December 18, 2008			Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on January 13, 2009
10.12	China Armco Metals, Inc. 2009 Stock Incentive Plan			Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 28, 2009
10.13	Form of China Armco Metals, Inc. Restricted Stock Agreement			Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on October 28, 2009
10.14	Loan Agreement between Armet (Lianyungang) Renewable Resources Co., Ltd. and Bank of China Dated September 4, 2009	√
10.15	Banking Facilities Agreement between Armco & Metawise (H.K.) Limited and DBS Bank (Hong Kong) Limited dated April 22, 2009	√
10.16	Uncommitted Trade Finance Facilities Agreement between Armco & Metawise (H.K.) Limited and RZB Austria Finance (Hong Kong) dated March 25, 2009	√
10.17	Line of Credit Review Approval Notice between Henan Armco & Metawise Trading Co., Ltd. and Guangdong Development Bank Zhengzhou Branch dated October 21, 2009	√
10.18	General Agreement Relating to Commercial Credits between Armco & Metawise (HK) Limited and ING Bank N.V., Hong Kong Branch dated December 3, 2009	√
10.19	Armet (Lianyungang) Renewable Resources Co., Ltd. Scrap Metal Sales Contract between dated February 21, 2010.	√*
14.1	Code of Ethics	√
21.1	List of subsidiaries of the Registrant	√
23.1	Consent of Li & Company,	√	
31.1	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer	√
31.2	Rule 13a-14(a)/ 15d-14(a) Certification of Principal Financial and Accounting Officer	√
32	Section 1350 Certifications of Chief Executive Officer and the Principal Financial and Accounting Officer	√

*Portions of this agreement have been omitted and marked with a [_] and separately filed with the Securities and Exchange Commission with a request for confidential treatment.

- 33 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	CHINA ARMCO METALS, INC.
Date: March 31, 2010	By:	/s/Kexuan Yao
		Kexuan Yao, Chairman, President and Chief Executive Officer (Principal Executive Officer)

We, the undersigned directors and officers of China Armco Metals, Inc., hereby severally constitute Kexuan Yao and Fengtao Wen, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Kexuan Yao	Chairman, President and Chief Executive Officer (Principal Executive Officer)	March 31, 2010
Kexuan Yao
/s/Fengtao Wen	Chief Financial Officer (Principal Financial and Accounting Officer)	March 31, 2010
Fengtao Wen
/s/Weigang Zhao	Director	March 31, 2010
Weigang Zhao
/s/ Tao Pang	Director	March 31, 2010
Tao Pang
/s/ Heping Ma	Director	March 31, 2010
Heping Ma
/s/ William Thomson	Director	March 31, 2010
William Thomson

- 34 -

Item 8. Financial Statements and Supplementary Data

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Index to Consolidated Financial Statements

Contents                                                                                                                                 0;         Page(s)

Report of Independent Registered Public Accounting Firm  Consolidated Balance Sheets  Consolidated Statements of Operations and Comprehensive Income  Consolidated Statement of Stockholders’ Equity  Consolidated Statements of Cash Flows  Notes to the Consolidated Financial Statements  Schedule: Schedule II Valuation and Qualifying Accounts for the year ended December 31, 2009 and 2008   F-2   F-3   F-4   F-5   F-6   F-7 to F-38     F-39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

China Armco Metals, Inc.

San Mateo, California

We have audited the accompanying consolidated balance sheets of China Armco Metals, Inc. and Subsidiaries (collectively “Armco Metals” or the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flows for the years then ended.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining on a t est basis, evidence supporting the amount and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008, and the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/Li & Company, PC

Li & Company, PC

Skillman, New Jersey

March 31, 2010

F-2

CHINA ARMCO METALS, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

	December 31, 2009		December 31, 2008
ASSETS
CURRENT ASSETS:
Cash	$	743,810	$	3,253,533
Pledged deposits		779,169		-
Accounts receivable, net		28,390,528		16,722,307
Inventories		496,149		197,402
Advance on purchases		3,903,782		3,680,872
Prepayments and other current assets		3,513,538		379,452
Total Current Assets		37,826,976		24,233,566
PROPERTY, PLANT AND EQUIPMENT, net		19,642,861		2,377,816
LAND USE RIGHTS, net		2,158,234		2,208,902
Total Assets	$	59,628,071	$	28,820,284
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable	$	17,021,558	$	2,914,345
Current maturities of long-term debt		2,193,881		-
Accounts payable		6,841,584		6,694,534
Advances from stockholder		35,475		236,595
Customer deposits		2,453,098		2,613,653
Corporate income tax payable		1,990,277		787,759
Value added tax and other taxes payable		1,312,455		251,553
Accrued expenses and other current liabilities		654,756		32,899
Total Current Liabilities		32,503,084		13,531,338
LONG-TERM DEBT		6,581,641		-
DERIVATIVE LIABILITY		3,417,974		-
Total Liabilities		42,502,699		13,531,338
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 1,000,000 shares authorized;
none issued or outstanding		-		-
Common stock, $0.001 par value, 74,000,000 shares authorized,
10,310,699 and 10,092,449 shares issued and outstanding, respectively		10,310		10,092
Additional paid-in capital		2,556,966		6,942,588
Deferred compensation		(676,500)		-
Retained earnings		14,936,915		7,967,064
Accumulated other comprehensive income:
Foreign currency translation gain		297,681		369,202
Total Stockholders' Equity		17,125,372		15,288,946
Total Liabilities and Stockholders' Equity	$	59,628,071	$	28,820,284
See accompanying notes to the Consolidated Financial Statements.

F-3

CHINA ARMCO METALS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	For the Year		For the Year
	Ended		Ended
	December 31, 2009		December 31, 2008
NET REVENUES	$	86,939,841	$	55,358,567
COST OF GOODS SOLD		77,995,219		51,226,667
GROSS PROFIT		8,944,622		4,131,900
OPERATING EXPENSES:
Selling expenses		447,051		121,362
General and administrative expenses		1,263,957		1,129,442
Total operating expenses		1,711,008		1,250,804
INCOME FROM OPERATIONS		7,233,614		2,881,096
OTHER (INCOME) EXPENSE:
Interest income		(14,092)		(15,696)
Interest expense		526,326		164,110
Import and export agency income		-		(3,367)
Gain from contracts termination		-		(1,151,453)
Loss (gain) on change in fair value of derivative liability		166,025		-
Loss on forward foreign currency contracts		-		19,739
Government subsidy		(52,347)		-
Other (income) expense		271,249		(191,097)
Total other (income) expense		897,161		(1,177,764)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		6,336,453		4,058,860
INCOME TAXES		1,212,057		787,759
INCOME FROM CONTINUING OPERATIONS		5,124,396		3,271,101
DISCONTINUED OPERATIONS
Gain on disposal of discontinued operations, net of tax		-		61,514
INCOME FROM DISCONTINUED OPERATIONS		-		61,514
NET INCOME		5,124,396		3,332,615
OTHER COMPREHENSIVE INCOME:
Foreign currency translation gain (loss)		(71,521)		292,544
COMPREHENSIVE INCOME	$	5,052,875	$	3,625,159

NET INCOME PER COMMON SHARE - BASIC AND DILUTED:
Continuing operations	$	0.51	$	0.44
Discontinued operations	$	0.00	$	0.00
Total net income per common share	$	0.51	$	0.44
Weighted Common Shares Outstanding - basic and diluted		10,101,603		7,512,085

See accompanying notes to the Consolidated Financial Statements.

F-4

CHINA ARMCO METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Year Ended December 31, 2009
	Common Stock, $0.001 Par Value														Accumulated Other Comprehensive Income
	Number of Shares			Amount			Additional Paid-in Capital			Deferred Compensation			Retained Earnings		Foreign Currency Translation Gain			Total Stockholders' Equity
Balance, December 31, 2007		5,300,000		$	5,300		$	367,726			-		$	4,634,449	$	76,658		$	5,084,133
Reverse acquisition adjustment		2,306,000			2,306			(61,326	)										(59,020	)
Issuance of common stock for cash from
July 25, 2008 through August 8, 2008,		2,486,649			2,487			1,520,790											1,523,277
net of offering costs
Issuance of warrants in connection with sale of
common stock for cash in July and August, 2008								5,097,404											5,097,404
Issuance of common stock for services on
October 15, 2008		6,000			6			17,994											18,000
Cancellation of common stock for sale of
fertilizer business on December 30, 2008		(6,200	)		(7	)													(7	)
Comprehensive income
Net income														3,332,615					3,332,615
Foreign currency translation gain																292,544			292,544
Total comprehensive income																			3,625,159
Balance, December 31, 2008		10,092,449			10,092			6,942,588		$	-			7,967,064		369,202			15,288,946
The cumulative adjustment from the warrants derivative
liability at January 1, 2009 upon adoption of
FASB ASC 815-40-15 (formerly "EITF 07-5")								(5,097,404	)					1,845,455					(3,251,949	)
Issuance of common stock for exercise of 5,000 share
warrants at $5.00 per share on January 30, 2009		5,000			5			24,995											25,000
Issuance of common stock to Hayden Communications
IR serviecs at $1.50 per share on May 7, 2009		7,000			7			10,493											10,500
Issuance of 2009 Stock inceptive plan to CEO and Directors
and Directors fo future services valued at
$3.28 per share granted on October 26, 2009		206,250			206			676,294			(676,500	)							-
Comprehensive income
Net income														5,124,396					5,124,396
Foreign currency translation gain																(71,521	)		(71,521	)
Total comprehensive income																			5,052,875
Balance, December 31, 2009		10,310,699		$	10,310		$	2,556,966		$	(676,500	)	$	14,936,915	$	297,681		$	17,125,372
See accompanying notes to the Consolidated Financial Statements.

F-5

CHINA ARMCO METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Year		For the Year
	Ended		Ended
	December 31, 2009		December 31, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,124,396	$	3,332,615
Adjustments to reconcile net income to net cash
Provided by (used in) operating activities
Depreciation expenses		75,383		34,413
Amortization expense		45,919		46,018
Change in fair value of derivative liability		166,025		-
Stock based compensation		10,500		18,000
Loss from disposal of property and equipment		-		5,433
Gain from disposal of discontinued operations		-		(61,514)
Changes in operating assets and liabilities:
Accounts receivable		(11,572,691)		(15,476,396)
Inventories		(299,171)		2,405,995
Advance on purchases		(216,014)		(1,720,206)
Prepayments and other current assets		(3,148,066)		(260,437)
Forward foreign exchange contracts swap		-		19,739
Accounts payable		154,294		6,444,793
Customer deposits		(154,936)		230,711
Taxes payable		2,263,962		1,158,952
Accrued expenses and other current liabilities		624,528		19,022
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(6,925,871)		(3,802,862)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from release of pledged deposits		-		603,187
Payment made towards pledged deposits		(779,170)		-
Purchases of property and equipment		(17,345,539)		(2,276,963)
NET CASH USED IN INVESTING ACTIVITIES		(18,124,709)		(1,673,776)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of forward foreign exchanage contracts		-		(343,023)
Proceeds from loans payable		19,111,122		2,914,345
Repayment of loans payable		(5,003,909)		-
Proceeds from long-term debt		8,775,522		-
Amounts received from (paid to) related parties		(312,889)		(710,041)
Sales of common stock and warrants, net of offering costs		25,000		6,623,168
NET CASH PROVIDED BY FINANCING ACTIVITIES		22,594,846		8,484,449
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(53,989)		13,436
NET CHANGE IN CASH		(2,509,723)		3,021,247
Cash at beginning of year		3,253,533		232,286
Cash at end of year	$	743,810	$	3,253,533
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid	$	526,326	$	164,110
Taxes paid	$	-	$	-
NON CASH FINANCING AND INVESTING ACTIVITIES:
Advances to then sole stockholder treated as dividends	$	-	$	-
See accompanying notes to the Consolidated Financial Statements.

F-6

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

NOTE 1 – ORGANIZATION AND OPERATIONS

China Armco Metals, Inc., a Nevada corporation and its subsidiaries are referred to in these notes as “Armco Metals” or the “Company”.

Through its wholly owned Chinese subsidiaries, the Company imports, sells and distributes a variety of metal ore to the metal refinery industry in the Peoples Republic of China (“PRC”). Also, in March 2010 the Company began operating a recently constructed scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in the Jiangsu province of the PRC capable of producing 1 million metric tons (“mmt”) of recycled metal per year.  Prior to June 27, 2008, the Company engaged in the distribution of organic fertilizer in the United States originally named Cox Distributing.  Cox Distributing was founded as an unincorporated business in January 1984 and incorporated as Cox Distributing, Inc., a Nevada corporation on April 6, 2007 at which time 9,100,000 sha res of common stock were issued to the founder in exchange for the existing unincorporated business.  No value was given to the stock issued by the newly formed corporation.  Therefore, the shares were recorded to reflect the $.001 par value and paid in capital was recorded as a negative amount ($910).  

On June 27, 2008, the Company amended its Articles of Incorporation, and changed its name to China Armco Metals, Inc. (upon the acquisition of Armco & Metawise (H.K) Ltd., a limited liability company established under the laws of Hong Kong (“Armco & Metawise”) and its subsidiaries.  On December 30, 2008, the Company discontinued its organic fertilizer distribution business.

Merger of Armco & Metawise (H.K) Ltd. and Subsidiaries (“Armco”)

On June 27, 2008, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) and consummated a share purchase (the “Share Purchase”) with Armco & Metawise and Ms. Feng Gao, who owned 100% of the issued and outstanding shares of Armco & Metawise .  In connection with the acquisition, the Company purchased from the Ms. Gao 100% of the issued and outstanding shares of Armco & Metawise’s capital stock for $6,890,000 by delivery of the Company’s purchase money promissory note.  In addition, the Company issued to Ms. Gao a stock option entitling Ms. Gao to purchase a total of 5,300,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) at $1.30 per share which expires on September 30, 2008 and 2,0 00,000 shares at $5.00 per share which expires on June 30, 2010 (the “Gao Option”).  On August 12, 2008, Ms. Gao exercised her option to purchase and the Company issued 5,300,000 shares of its common stock in exchange for the $6,890,000 note owed to Ms. Gao.  The shares issued represented approximately 69.7% of the issued and outstanding common stock immediately after the consummation of the Share Purchase and exercise of the option to purchase 5,300,000 shares of the Company’s common stock at $1.30 per share.  As a result of the ownership interests of the former shareholders of Armco & Metawise, for financial statement reporting purposes, the merger between the Company and Armco & Metawise has been treated as a reverse acquisition with Armco & Metawise deemed the accounting acquirer and the Company deemed the accounting acquiree under the purchase method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards Codificatio n. The reverse merger is deemed a capital transaction and the net assets of Armco & Metawise (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the combination.  The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Armco & Metawise which are recorded at historical cost.  The equity of the Company is the historical equity of Armco & Metawise retroactively restated to reflect the number of shares issued by the Company in the transaction.

Armco & Metawise (H.K) Ltd. was incorporated on July 13, 2001 under the laws of the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of China (“PRC”).  Armco & Metawise engages in the import, export and distribution of ferrous and non-ferrous ore and metals, and the recycling of scrap steel.

On January 9, 2007, Armco & Metawise formed Armet (Lianyungang) Renewable Resources Co, Ltd. (“Armet”), a wholly-owned foreign enterprise (“WOFE”) subsidiary in the City of Lianyungang, Jiangsu Province, PRC.  Armet engages in the recycling of scrap steel.

Henan Armco and Metawise Trading Co., Ltd. (“Henan”) was incorporated on June 6, 2002 in the City of Zhengzhou, Henan Province, PRC.  Henan engages in the import, export and distribution of ferrous and non-ferrous ore and metals.

F-7

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Merger of Henan Armco and Metawise Trading Co., Ltd. (“Henan”) with Armet, Companies under Common Control

On December 28, 2007, Armco & Metawise by and through its wholly owned subsidiary, Armet, entered into a Share Transfer Agreement with Henan, a company under common control with Armco & Metawise.  The acquisition of Henan has been recorded on the purchase method of accounting at historical amounts as Armet and Henan were under common control since June 2002.  The consolidated financial statements have been presented as if the acquisition of Henan had occurred as of the first date of the first period presented.

Formation of Armco (Lianyungang) Holdings, Inc.

On June 4, 2009, the Company formed Armco (Lianyungang) Holdings, Inc. (“Lianyungang”), a wholly-owned foreign enterprise (“WOFE”) subsidiary in the City of Lianyungang, Jiangsu Province, PRC.  Lianyungang intends to engage in marketing and distribution of the recycled scrap steel.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The Company’s consolidated financial statements include all of the accounts of its subsidiarie as of December 31, 2009 and 2008 and for the years then ended.  Armco & Metawise is included as of December 31, 2009 and 2008 for the year ended December 31, 2009 and for the period from June 27, 2008 (date of acquisition) through December 31, 2008.  Lianyungang is included as of December 31, 2009 and for the period from June 4, 2009 (inception) through December 31, 2009.  All inter-company balances and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period.  Significant estimates include the estimated useful lives of property and equipment.  Actual results could differ from those estimates.

Cash equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

Pledged deposits

Pledged deposits consist of amounts held in financial institutions for outstanding letters of credit maturing in specified periods.

Accounts receivable

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense is included in general and administrative expenses, if any.

F-8

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Outstanding account balances are reviewed individually for collectability.  Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The Company does not have any off-balance-sheet credit exposure to its customers.

Inventories

The Company values inventories, consisting of purchased products, at the lower of cost or market.  Cost is determined on the first-in and first-out (“FIFO”) method.  The Company regularly reviews its inventories on hand and, when necessary, records a provision for excess or obsolete inventories based primarily on current selling price and spot market prices.  The Company determined that there was no inventory obsolescence as of December 31, 2009 or 2008.

Advance on purchases

Advance on purchases primarily represent amounts paid to vendors for future delivery of products, all of which were fully or partially refundable depending upon the terms and conditions of the purchase agreements.

Property, plant and equipment

Property, plant and equipment are recorded at cost.  Expenditures for major additions and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred.  Depreciation of property, plant and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives ranging from five (5) years to twenty (20) years.  Upon sale or retirement of property, plant and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of income and comprehensive income.  Leasehold improvements, if any, are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.  Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.

Land use right

Land use right represents the cost to obtain the right to use a 32 acre parcel of land in the City of Lianyungang, Jiangsu Province, PRC.  Land use right is carried at cost and amortized on a straight-line basis over the fifty (50) year life of the right.  Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.

Impairment of long-lived assets

The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include property, plant and equipment, and land use right are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.  The Company dete rmined that there were no impairments of long-lived assets as of December 31, 2009 or 2008.

F-9

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Customer deposits

Customer deposits primarily represent amounts received from customers for future delivery of products, all of which were fully or partially refundable depending upon the terms and conditions of the sales agreements.

Derivative instruments and hedging activities

The Company accounts for derivative instruments and hedging activities in accordance with paragraph 810-10-05-4 of the FASB Accounting Standards Codification (“Paragraph 810-10-05-4”). Paragraph 810-10-05-4 requires companies to recognize all derivative instruments as either assets or liabilities in the balance sheet at fair value.  The accounting for changes in the fair value of a derivative instrument depends on: (i) whether the derivative has been designated and qualifies as part of a hedging relationship, and (ii) the type of hedging relationship.  For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument based upon the exposure being hedged as either a fair value hedge, cash flow hedge or hedge of a net investment in a f oreign operation.

From time to time, the Company employs foreign currency forward contracts to convert unforeseeable foreign currency exchange rates to fixed foreign currency exchange rates.  The Company does not use derivatives for speculation or trading purposes.  Changes in the fair value of derivatives are recorded each period in current earnings or through other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and the type of hedge transaction.  The ineffective portion of all hedges is recognized in current earnings.  The Company has sales and purchase commitments denominated in foreign currencies.  Foreign currency forward contracts are used to hedge against the risk of change in the fair value of these commitments attributable to fluctuations in exchange rates (“Fair Value Hedges”).  Changes in the fair value of the derivative instrument are generally offset in the income statement by changes in the fair value of the item being hedged.  The Company employed foreign currency forward contracts to convert unforeseeable foreign currency exchange rates to fixed foreign currency exchange rates in 2008 and did not employ foreign currency forward contracts to convert unforeseeable foreign currency exchange rates to fixed foreign currency exchange rates in 2009.

Derivative warrant liability

On January 1, 2009, the Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”)to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock.  Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.   The adoption of Section 815-40-15 has affected the accounting for (i) certain freestanding warrants that contain exercise price adjustment features and (ii) convertible bonds issued by foreign subsidiaries with a strike price denominated in a fo reign currency.

The Company classified 2,728,913 common stock purchase warrants issued in connection with its July 2008 offering of common stock as additional paid-in capital upon issuance of the warrants.  Upon the adoption of Section 815-40-15 on January 1, 2009 these warrants are no longer deemed to be indexed to the Company’s own stock and were reclassified from equity to a derivative liability with a  fair value of $3,251,949 effective as of January 1, 2009.  The reclassification entry included a cumulative adjustment to retained earnings of $1,845,455 and a reduction of additional paid-in capital of $5,097,404, the amount originally classified as additional paid-in capital upon issuance of the warrants on July 31, 2008 (see Note 3- Restatement of Financial Statements Included in Previously Filed Interim Repor ts).  For the year ended December 31, 2009, we recorded a loss on change in fair value of derivative liability of $166,025 from the mark to market for the increase in fair value of the warrants to $3,417,974 at December 31, 2009 (see Note 10 - Derivative instruments and fair value of financial instruments).

F-10

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gi ves the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepayments and other current assets, accounts payable, taxes payable, accrued expenses and other current liabilities, and derivative liability approximate their fair values because of the short maturity of these instruments.  The Company’s loan payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2009 and 2008.

The Company revalues its derivative liability every reporting period and recognizes gains or losses in the consolidated statements of operations that are attributable to the change in unrealized gains or losses relating to the liability.  The Company has no other assets or liabilities measured at fair value on a recurring basis..

Revenue recognition

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.  In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue:

(i) Import, export and distribution of ferrous and non-ferrous ore and metals and processed scrap metal:  The Company derives its revenues from sales of metal ore pursuant to contracts with customers with revenues being generated upon the shipment of goods.  Persuasive evidence of an arrangement is demonstrated via invoice or contract, product delivery is evidenced by warehouse shipping log as well as a signed bill of lading from the vessel, trucking or rail company and title transfers upon shipment, based on free on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon execution of a contract or acceptance of a p urchase order and there is no separate sales rebate, discount, or volume incentive.  When the Company recognizes revenue, no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues.

(ii) Import and export agent services:  Revenue from import and export agent services is recognized as the services are provided.  The import and export agent services are considered provided when the goods to be imported or exported by the customer are delivered to the designated port specified by the service contract.  The Company follows paragraph 605-45-45-15 to paragraph 605-45-45-18 of the FASB Accounting Standards Codification for revenue recognition to report revenue net for its import and export agent services since (1) the Company’s supplier is the primary obligor in the arrangement, (2) the amount the Company earns is fix ed, and (3) the Company’s supplier has credit risk.  The Company did not provide import and export agent services in 2009.

F-11

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Net sales of products represent the invoiced value of goods, net of value added taxes (“VAT”).  The Company is subject to VAT which is levied on the majority of the Company’s products at the rate of 13% on the invoiced value of sales prior to December 31, 2008 and 17% on the invoiced value of sales as of January 1, 2009 and forward.  Sales or Output VAT is borne by customers in addition to the invoiced value of sales and Purchase or Input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

Shipping and handling costs

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification.  While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of goods sold as incurred.

Foreign currency transactions

The Company applies the guidelines as set out in Section 830-20-35 of the FASB Accounting Standards Codification (“Section 830-20-35”) for foreign currency transactions.  Pursuant to Section 830-20-35 of the FASB Accounting Standards Codification, foreign currency transactions are transactions denominated in currencies other than U.S. Dollar, the Company’s reporting currency or Chinese Yuan or Reminbi, the Company’s Chinese operating subsidiaries' functional currency.  Foreign currency transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid.  A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of fu nctional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or lossthat generally shall be included in determining net income for the period in which the exchange rate changes. Likewise, a transaction gain or loss (measured from the transaction dateor the most recent intervening balance sheet date, whichever is later) realized upon settlement of a foreign currency transaction generally shall be included in determining net income for the period in which the transaction is settled. The exceptions to this requirement for inclusion in net income of transaction gains and losses pertain to certain intercompany transactions and to transactions that are designated as, and effective as, economic hedges of net investments and foreign currency commitments.  Pursuant to Section 830-20-25 of the FASB Accounting Standards Codification, the following shall apply to all foreign currency transactions of an enterprise and its investees: (a) at the date the transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction shall be measured and recorded in the functional currency of the recording entity by use of the exchange rate in effect at that date as defined in section 830-10-20 of the FASB Accounting Standards Codification; and (b) at each balance sheet date, recorded balances that are denominated in currencies other than the functional currency or reporting currency of the recording entity shall be adjusted to reflect the current exchange rate.

Stock-based compensation for obtaining employee services

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of section 505-50-30 of the FASB Accounting Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

The fair value of each option grant estimated on the date of grant uses the Black-Scholes option-pricing model with the following weighted-average assumptions:

Date of Grant	June 27, 2008
Expected option life (year)		2.00
Expected volatility		0.00%
Risk-free interest rate		2.65%
Dividend yield		0.00%

F-12

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing valuation model.  The ranges of assumptions for inputs are as follows:

 The Company uses historical data to estimate employee termination behavior.  The expected life of options granted is derived from paragraph 718-10-S99-1 of the FASB Accounting Standards Codification and represents the period of time the options are expected to be outstanding.

 The expected volatility is based on a combination of the historical volatility of the comparable companies’ stock over the contractual life of the options.

 The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option.

 The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the option.

The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

Equity instruments issued to parties other than employees for acquiring goods or services

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of section 505-50-30 of the FASB Accounting Standards Codification (“FASB ASC Section 505-50-30”).  Pursuant to FASB ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

Income taxes

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Income and Comprehensive Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty (50) percent likelihood of being realized upon ultimate settlement.  Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

F-13

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Foreign currency translation

The financial records of the Company's Chinese operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is the functional currency.  Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars, at the exchange rate prevailing at the balance sheet date.  Revenues and expenses are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the consolidated financial statements.  Foreign currencytranslation gain (loss) resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumula ted other comprehensive income in the consolidated statement of stockholders’ equity.

RMB is not a fully convertible currency.  All foreign exchange transactions involving the RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange.  The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC.  Commencing July 21, 2005, China adopted a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies.  The exchange rate of the US dollar against the RMB was adjusted from approximately RMB 8.28 per US dollar to approximately RMB 8.11 per US dollar on July 21, 2005.  Since then, the PBOC administers and regulates the exchange rate of the US dollar against th e RMB taking into account demand and supply of RMB, as well as domestic and foreign economic and financial conditions.

Unless otherwise noted, the rate presented below per U.S. $1.00 was the noon buying rate for RMB in New York City as reported by the Federal Reserve Bank of New York on the date of its consolidated balance sheets through December 31, 2008 and the interbank rate as quoted by OANDA Corporation (www.oanda.com) as of January 1, 2009 and forward contained in its consolidated financial statements.  Management believes that the difference between the RMB vs. US$ exchange rate quoted by the PBOC and the RMB vs. US$ exchange rate reported by OANDA Corporation or the Federal Reserve Bank of New York were immaterial.  Translations do not imply that the RMB amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars.
60; Translation of amounts from RMB into United States dollars (“US$”) has been made at the following exchange rates for the respective periods:

	December 31, 2009		December 31, 2008		December 31, 2007
Balance sheet		6.8372		6.8225		7.2946
Statement of income and comprehensive income		6.8409		6.9477

Net gains and losses resulting from foreign exchange transactions, if any, are included in the Company’s Consolidated Statements of Income and Comprehensive Income.  The foreign currency translation gain (loss) was $(71,521) and $292,544 and the effect of exchange rate changes on cash flows were $(53,989) and $13,436 for the years ended December 31, 2009 and 2008, respectively.

Comprehensive income

The Company has applied section 220-10-45 of the FASB Accounting Standards Codification. This statement establishes rules for the reporting of comprehensive income and its components.  Comprehensive income, for the Company, consists of net income and foreign currency translation adjustments and is presented in the Company’s Consolidated Statements of Income and Comprehensive Income and Stockholders’ Equity.

Net income per common share

Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.   Basic net income per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period.  Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period to reflect the potential dilution that could occur from common shares issuable through stock options and warrants.

F-14

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

The following table shows the weighted-average number of potentially outstanding dilutive shares excluded from the diluted net loss per share calculation for the year ended December 31, 2009 and 2008 as they were anti-dilutive:

	Weighted average number of potentially outstanding dilutive shares
	For the Year Ended December 31, 2009	For the Year Ended December 31, 2008
Stock options issued on June 27, 2008 in connection with the acquisition of Armco & Metawise	2,000,000		2,000,000
Warrants issued on August 1, 2008 in connection with the Company’s August 1, 2008 equity financing	2,723,913		2,728,913
Total potentially outstanding dilutive shares	4,723,913		4,728,913

Commitment and contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Cash flows reporting

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. 0; The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Subsequent events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will disclose the date through whichsubsequent eventshave been evaluated and that date is the date when thefinancial statements were issued.

F-15

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Recently issued accounting pronouncements

On June 5, 2003, the United States Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC Release No. 33-9072 on October 13, 2009.  Under the provisions of Section 404 of the Sarbanes-Oxley Act, public companies and their independent auditors are each required to report to the public on the effectiveness of a company’s internal controls.  The smallest public companies with a public float below $75 million have been given extra time to design, implement and document these internal controls before their auditors are required to attest to the effectiveness of these controls.  This extension of time will expire beginning with the annual reports of companies with fiscal years ending on o r after June 15, 2010.  Commencing with its annual report for the year ending December 31, 2010, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement

 Of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;

 Of management’s assessment of the effectiveness of its internal control over financial reporting as of year end; and

 Of the framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting.

Furthermore, the Company is required to file the auditor’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that it has maintained, in all material respects, effective internal control over financial reporting.

In June 2009, the FASB approved the “FASB Accounting Standards Codification” (the “Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009.  The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place.  All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. The Codification is effective for interim and annual periods ending after September 15, 2009.

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-04 “Accounting for Redeemable Equity Instruments - Amendment to Section 480-10-S99” which represents an update to section 480-10-S99, distinguishing liabilities from equity, per EITF Topic D-98, Classification and Measurement of Redeemable Securities.  The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-05 “Fair Value Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair Value”, which provides amendments to subtopic 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities.  This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1. A valuation technique that uses: a. The quoted price of the identical liability when traded as an asset b. Quoted prices for similar liabilities or similar liabilities when traded as a ssets. 2. Another valuation technique that is consistent with the principles of topic 820; two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this update also clarify that both a quoted price in an active market for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements.  The Company does not expect the adoption of this update to have a material impact o n its consolidated financial position, results of operations or cash flows.

F-16

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 “Earnings Per Share – Amendments to Section 260-10-S99”,which represents technical corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock. The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-09 “Accounting for Investments-Equity Method and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees”.  This update represents a correction to Section 323-10-S99-4, Accounting by an Investor for Stock-Based Compensation Granted to Employees of an Equity Method Investee. Additionally, it adds observer comment Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees to the Codification. The Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-12 “Fair Value Measurements and Disclosures Topic 820 – Investment in Certain Entities That Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). The amendments in this update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (o r its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this update, such as the nature of any restrictions on the investor’s ability to redeem its investments a the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be make by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in U.S. GAAP o n investments in debt and equity securities in paragraph 320-10-50-1B. The disclosures are required for all investments within the scope of the amendments in this update regardless of whether the fair value of the investment is measured using the practical expedient. The Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-01 “Equity Topic 505 – Accounting for Distributions to Shareholders with Components of Stock and Cash”, which clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share (“EPS”)).  Those distributions should be accounted for and included in EPS calculations in accordance with paragraphs 480-10-25- 14 and 260-10-45-45 t hrough 45-47 of the FASB Accounting Standards codification.  The amendments in this Update also provide a technical correction to the Accounting Standards Codification.  The correction moves guidance that was previously included in the Overview and Background Section to the definition of a stock dividend in the Master Glossary.  That guidance indicates that a stock dividend takes nothing from the property of the corporation and adds nothing to the interests of the stockholders.  It also indicates that the proportional interest of each shareholder remains the same, and is a key factor to consider in determining whether a distribution is a stock dividend.

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-02 “Consolidation Topic 810 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification”, which provides amendments to Subtopic 810-10 and related guidance within U.S. GAAP to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to the following:

1. A subsidiary or group of assets that is a business or nonprofit activity

2. A subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture

3. An exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture).

F-17

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

The amendments in this Update also clarify that the decrease in ownership guidance in Subtopic 810-10 does not apply to the following transactions even if they involve businesses:

1. Sales of in substance real estate.  Entities should apply the sale of real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment) and 976-605 (Retail/Land) to such transactions.

2. Conveyances of oil and gas mineral rights.  Entities should apply the mineral property conveyance and related transactions guidance in Subtopic 932-360 (Oil and Gas-Property, Plant, and Equipment) to such transactions.

If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, an entity first needs to consider whether the substance of the transaction causing the decrease in ownership is addressed in other U.S. GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in Subtopic 810-10.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

NOTE 3- RESTATEMENT OF FINANCIAL STATEMENTS INCLUDED IN PREVIOUSLY FILED INTERIM REPORTS

The March 31, 2009, June 30, 2009, and September 30, 2009 unaudited financial statements included in the Company’s Form 10-Q’s filed with the SEC on May 20, 2009, August 14, 2009, and November 25, 2009, respectively, did not properly record the Company’s common stock purchase warrants as a derivative liability at January 1, 2009 upon our adoption of Derivative and Hedging Topic of the FASB ASC 815 and did not properly record the subsequent accounting for the changes in the fair value of the associated liability at March 31, 2009, June 30, 2009, and September 30, 2009.

Accordingly, our unaudited consolidated balance sheets at March 31, 2009, June 30, 2009, and September 30, 2009, which are included in previously filed interim reports, have been restated to correct the accounting treatment for our common stock purchase warrants.

The derivative liability and loss on change in fair value of the derivative liability is correctly recorded and presented in accordance with the Derivative and Hedging Topic – FASB ASC 815 on the balance sheet, statement of operations, statement of cash flows in the financial statements for the year ended December 31, 2009 included in this report (See Note 10 - Derivative Instruments and Fair Value of Financial Instruments).

The effect of correcting this error in our a) balance sheets at March 31, 2009, June 30, 2009 and September 30, 2009; b) statements of operations for the three months ended March 31, 2009, three months and six months ended June 30, 2009, and three and nine months ended September 30, 2009; and c) statements of cash flows for the three months ended March 31, 2009, six months ended June 30, 2009, and nine months ended September 30, 2009 are shown in the table below:

F-18

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Balance Sheet Data	March 31, 2009 (Unaudited)
	As filed		Adjustment to Restate			Restated
Derivative Liability	$	-	$	3,082,123		$	3,082,123
Total Liabilities		14,871,747		3,082,123		$	17,953,870
Stockholders' equity:
Preferred Stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding		-		-			-
Common Stock, $0.001 par value,  74,000,000 shares authorized, 10,097,449 issued and outstanding		10,097		-			10,097
Additional Paid-in-capital		6,967,583		(5,097,404	)		1,870,179
Retained earnings		8,094,700		2,015,281			10,109,981
Accumulated other comprehensive income
Foreign currency translation gain		342,757		-			342,757
Total stockholders' equity		15,415,137		(3,082,123	)		12,333,014
Total liabilities and equity	$	30,286,884		-		$	30,286,884

Balance Sheet Data	June 30, 2009 (Unaudited)
	As filed		Adjustment to Restate			Restated
Derivative Liability	$	-	$	3,326,673		$	3,326,673
Total Liabilities		19,531,034		3,326,673		$	22,857,707
Stockholders' equity:
Preferred Stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding		-		-			-
Common Stock, $0.001 par value,  74,000,000 shares authorized, 10,104,449 issued and outstanding		10,104		-			10,104
Additional Paid-in-capital		6,978,076		(5,097,404	)		1,880,672
Retained earnings		11,464,463		1,770,731			13,235,194
Accumulated other comprehensive income		310,801		-			310,801
Total stockholders' equity		18,763,444		(3,326,673	)		15,436,771
Total liabilities and equity	$	38,294,478		-		$	38,294,478

F-19

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Balance Sheet Data	September 30, 2009 (Unaudited)
	As filed		Adjustment to Restate			Restated
Derivative Liability	$	-	$	3,900,217		$	3,900,217
Total Liabilities		64,689,839		3,900,217		$	68,590,056
Stockholders' equity:
Preferred Stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding		-		-			-
Common Stock, $0.001 par value,  74,000,000 shares authorized, 10,104,449 issued and outstanding		10,104		-			10,104
Additional Paid-in-capital		6,978,076		(5,097,404	)		1,880,672
Retained earnings		10,604,800		1,197,187			11,801,987
Accumulated other comprehensive income		351,670		-			351,670
Total stockholders' equity		17,944,650		(3,900,217	)		14,044,433
Total liabilities and equity	$	82,634,489		-		$	82,634,489

Statement of Operations Data	For the three months ended March 31, 2009 (Unaudited)
	As filed		Adjustment to Restate			Restated
Other (income) expense
Interest expense	$	18,036	$	-		$	18,036
Loss on forward foreign currency contracts		-		-			-
(Gain) loss on change in fair value of derivative liability		-		(169,826	)		(169,826	)
Other (income) expense		30,227		-			30,227
Total other (income) expense		48,263		(169,826	)		(121,563	)
Income from continuing operations before income taxes		128,426		169,826			298,252
Income taxes		790		-			790
Net income applicable to shareholders		127,636		169,826			297,462
Comprehensive income	$	101,191	$	169,826		$	271,017
Net income per common share - Basic and Diluted
Total net income per common share	$	0.01	$	0.02		$	0.03
Weighted Common Shares Outstanding - Basic and Diluted		10,095,616		-			10,095,616

F-20

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Statement of Operations Data	For the three months ended June 30, 2009 (Unaudited)
	As filed			Adjustment to Restate			Restated
Other (income) expense
Interest income	$	(45,018	)	$	-		$	(45,018	)
Interest expense		119,120			-			119,120
Import and export agency income		(47,244	)		-			(47,244	)
Gain from contracts termination		-			-			-
Loss on forward foreign currency contracts		(12,079	)		-			(12,079	)
(Gain) loss on change in fair value of derivative liability		-			244,550			244,550
Other (income) expense		66,945			-			66,945
Total other (income) expense		81,724			244,550			326,274
Income from operations before income taxes		3,369,334			(244,550	)		3,124,784
Income taxes (benefit)		(726	)		-			(726	)
Net income applicable to shareholders		3,370,060			(244,550	)		3,125,510
Comprehensive income	$	3,338,104		$	(244,550	)	$	3,093,554
Net income per common share - Basic and Diluted
Total net income per common share	$	0.33		$	(0.02	)	$	0.31
Weighted Common Shares Outstanding - Basic and Diluted		10,097,449			-			10,097,449

Statement of Operations Data	For the six months ended June 30, 2009 (Unaudited)
	As filed			Adjustment to Restate			Restated
Other (income) expense
Interest income	$	(45,018	)	$	-		$	(45,018	)
Interest expense		137,156			-			137,156
Import and export agency income		(47,244	)		-			(47,244	)
Gain from contracts termination		-			-			-
Loss on forward foreign currency contracts		(12,079	)		-			(12,079	)
(Gain) loss on change in fair value of derivative liability		-			74,724			74,724
Other (income) expense		97,172			-			97,172
Total other (income) expense		129,987			74,724			204,711
Income from operations before income taxes		3,497,770			(74,724	)		3,423,046
Income taxes (benefit)		74			-			74
Net income applicable to shareholders		3,497,696			(74,724	)		3,422,972
Comprehensive income	$	3,439,295		$	(74,724	)	$	3,364,571
Net income per common share - Basic and Diluted
Total net income per common share	$	0.33		$	(0.01	)	$	0.32
Weighted Common Shares Outstanding - Basic and Diluted		10,096,538			-			10,096,538

F-21

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Statement of Operations Data	For the three months ended September 30, 2009 (Unaudited)
	As filed			Adjustment to Restate			Restated
Other (income) expense
Interest expense	$	56,727		$	-		$	56,727
Import and export agency income		-			-			-
Gain from contracts termination		-			-			-
Loss on forward foreign currency contracts		12,079			-			12,079
(Gain) loss on change in fair value of derivative liability		-			573,544			573,544
Other (income) expense		236,181			-			236,181
Total other (income) expense		304,987			573,544			878,531
Income from operations before income taxes		275,293			(573,544	)		(298,251	)
Income taxes (benefit)		1,140,343			-			1,140,343
Net income applicable to shareholders		(865,050	)		(573,544	)		(1,438,594	)
Comprehensive income	$	(824,181	)	$	(573,544	)	$	(1,397,725	)
Net income per common share - Basic and Diluted
Total net income per common share	$	(0.09	)	$	(0.06	)	$	(0.15	)
Weighted Common Shares Outstanding - Basic and Diluted		10,104,449			-			10,104,449

Statement of Operations Data	For the nine months ended September 30, 2009 (Unaudited)
	As filed			Adjustment to Restate			Restated
Other (income) expense
Interest expense	$	148,865		$	-		$	148,865
Import and export agency income		(52,335	)		-			(52,335	)
Gain from contracts termination		-			-			-
Loss on forward foreign currency contracts		-			-			-
(Gain) loss on change in fair value of derivative liability		-			648,268			648,268
Other (income) expense		333,353			-			333,353
Total other (income) expense		429,883			648,268			1,078,151
Income from operations before income taxes		3,778,154			(648,268	)		3,129,886
Income taxes (benefit)		1,140,418			-			1,140,418
Net income applicable to shareholders		2,637,736			(648,268	)		1,989,468
Comprehensive income	$	2,620,205		$	(648,268	)	$	1,971,937
Net income per common share - Basic and Diluted
Total net income per common share	$	0.26		$	(0.06	)	$	0.20
Weighted Common Shares Outstanding - Basic and Diluted		10,100,589			-			10,100,589

F-22

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Statement of Cash Flow Data	For the three months ended March 31, 2009 (Unaudited)
	As filed		Adjustment to Restate			Restated
Net income	$	127,636	$	169,826		$	297,462
Gain on change in fair value of derivative liability		-		(169,826	)		(169,826	)
Net cash provided by operating activities	$	5,150,317	$	-		$	5,150,317

Statement of Cash Flow Data	For the six months ended June 30, 2009
	As filed		Adjustment to Restate			Restated
Net income	$	3,497,696	$	(74,724	)	$	3,422,972
Loss on change in fair value of derivative liability		-		74,724			74,724
Net cash provided by operating activities	$	17,082,689	$	-		$	17,082,689

Statement of Cash Flow Data	For the nine months ended September 30, 2009 (Unaudited)
	As filed			Adjustment to Restate			Restated
Net income	$	2,637,736		$	(648,268	)	$	1,989,468
Loss on change in fair value of derivative liability		-			648,268			648,268
Net cash provided by operating activities	$	(3,145,087	)	$	-		$	(3,145,087	)

NOTE 4 – PLEDGED DEPOSITS

Pledged deposits represent cash with financial institutions as collateral for letters of credit to be issued by such financial institutions to pay vendors of metal ore and scrap metal upon receipt of the goods by the Company.  Pledged deposits at December 31, 2009 and 2008 consisted of the following:

	December 31, 2009		December 31, 2008
Armco & Metawise
Letters of credit (1)	$	194,700	$	-
Henan Armco
Letters of credit (2)		584,469		-
	$	779,169	$	-

(1)   On January 20, 2010 and March 3, 2010, $29,700 and $165,000 were released to the Company, respectively due to vendors' non-performance.

(2)   As of March 30, 2010, $513,788 was released to the Company and $70,681 is in the process of being released to the Company due to vendor’s non-performance.

F-23

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

NOTE 5 – INVENTORIES

Inventories at December 31, 2009 and 2008 consisted of the following:

	December 31, 2009			December 31, 2008
Goods purchased	$	496,149	*	$	197,402
	$	496,149		$	197,402

(*)  The Company collateralized all of its inventories to a financial institution to obtain working capital at December 31, 2009.

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, stated at cost, less accumulated depreciation at December 31, 2009 and 2008 consisted of the following:

	Estimated Useful Life (Years)	December 31, 2009			December 31, 2008
Buildings and leasehold improvements	20	$	393,418		$	332,738
Construction in progress (i)			18,994,767			1,837,503
Machinery and equipment	7		18,376
Vehicles	5		291,787			200,270
Office equipment	5-8		80,965			68,508
			19,779,313			2,439,019
Less accumulated depreciation (ii)			(136,452	)		(61,203	)
		$	19,642,861		$	2,377,816

 (i)           Construction in progress

Construction in progress includes capital expenditures for construction of the Company’s scrap metal recycling facility, including buildings, machinery, equipment and facility set up charges.  For the year ended December 31, 2009 and 2008, the Company did not capitalize any interest to construction in progress.

(ii)           Depreciation and amortization expense

Depreciation and amortization expense for the year ended December 31, 2009 and 2008 was $78,152, and 35,066, respectively.

F-24

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

NOTE 7 – LAND USE RIGHT

Land use right at cost at December 31, 2009 and 2008, consisted of the following:

	December 31, 2009			December 31, 2008
Land use right	$	2,261,204		$	2,266,076
Accumulated amortization		(102,970	)		(57,174	)
	$	2,158,234		$	2,208,902

Amortization expense

Amortization expense for the years ended December 31, 2009 and 2008 was $45,919, and $46,018, respectively.  Amortization expense for the next five years is approximately $46,000 per year.

NOTE 8 –LOANS PAYABLE

Loans payable at December 31, 2009 and December 31, 2008 consisted of the following:

	December 31, 2009		December 31, 2008
Armco & Metawise
Loan payable to a financial institution, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 7.80% per annum payable monthly, with principal due and paid January 15, 2009.	$	-	$	1,414,345
Loan payable to a financial institution, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 7.85% per annum payable monthly, with principal due and paid January 15, 2009.		-		1,500,000
Loan payable to a financial institution, collateralized by certain of the Company’s inventory, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 3.30% per annum payable monthly, with principal due and paid on February 4, 2010		12,277,218		-
Henan Armco
Loan payable to an individual, non-interest bearing, with principal due on demand		146,259
Loan payable to a financial institution, collateralized by certain of the Company’s inventory, with interest at 6.30% per annum payable monthly, with principal paid as of March 24, 2010	$	4,598,081	$	-
	$	17,021,558	$	2,914,345

F-25

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

NOTE 9 – RELATED PARTY TRANSACTIONS

Operating lease from Chairman, CEO and Stockholder

On January 1, 2006, Henan entered into a non-cancellable operating lease for its 176.37 square meter commercial office space in the City of Zhengzhou, Henan Province, PRC from Chairman, Chief Executive Officer and stockholder of the Company for RMB10,000 per month, which expired on December 31, 2008 and has been extended through December 31, 2011.  Total lease payments for the year ended December 31, 2009 and 2008 amounted to RMB120,000 per year (equivalent to $17,542 and $17,272, respectively).  Future minimum lease payments required under the non-cancelable operating lease are RMB120,000 per year (equivalent to $17,542 at December 31, 2009) for 2010 through 2011.

Operating lease agreement from Prime Armet Group, Inc., an entity controlled by Mr. Yao, its Chairman, CEO and Stockholder

On October 1, 2009, the Company entered into a non-cancellable operating lease for its commercial office space in California expiring September 30, 2010.  Future minimum lease payments required under the non-cancelable operating lease are $1,000 per month or $9,000 for the remaining term of the lease in 2010.

Advances from stockholder

Advances from stockholder at December 31, 2009 and 2008 consisted of the following:

	December 31, 2009		December 31, 2008
Advances from chairman, chief executive officer and stockholder	$	35,475	$	236,595
					)
	$	35,475	$	236,595

The advances bear no interest and have no formal repayment terms.

Our principal executive offices in the U.S. are located at One Waters Park Drive, Suite 98, San Mateo, CA 94403.  We pay rent of $1,000.00 per month to occupy a portion of this 905 square foot office pursuant to a sublease agreement with Prime Armet Group, Inc., a company owned by Kexuan Yao, our Chief Executive Officer.  The sublease for this office expires on September 30, 2012.

F-26

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

NOTE 10 – LONG-TERM DEBT

Loan payable at December 31, 2009 and 2008 consisted of the following:

	December 31, 2009		December 31, 2008
Armet
Long-term debt due to a financial institution, collateralized by all of Armet’s building, equipment and land use right, with interest at 5.40% per annum payable monthly, with principal of RMB15,000,000 ($2,193,881), RMB30,000,000 ($4,387,761), and RMB15,000,000 ($2,193,880) due May 25, 2010, August 25, 2011 and August 25, 2012, respectively.	$	8,775,522	$	-
		8,775,522		-
Less: current maturities		(2,193,881)		-
LONG-TERM DEBT, net current maturities	$	6,581,641	$	-

NOTE 11 – DERIVATIVE INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Description of warrants

In connection with the four (4) rounds of private placements from July 25, 2008 through August 8, 2008, the Company issued (i) warrants for 2,486,649 shares to the investors and (ii) warrants for 242,264 shares to the brokers, or 2,728,913 shares in aggregate with an exercise price of $5.00 per share and an expiration date of August 31, 2013, all of which have been earned upon issuance.  The fair value of these warrants granted, estimated on the date of grant, was $5,097,404, which was originally recorded as additional paid-in capital, using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Expected option life (year)	5.00
Expected volatility	89%
Risk-free interest rate	3.23%
Dividend yield	0.00%

The remaining balance of the net proceeds of $1,523,277 was assigned to Common stock.

Derivative analysis

The exercise price of the warrants and the number of shares issuable upon exercise is subject to reset adjustment in the event of stock splits, stock dividends, recapitalization, most favored nation clause and similar corporate events.  Pursuant to the most favored nation provision of 2008 Unit Offering, other than the excepted issuances, if the Company issues any common stock or securities to any person or entity at a purchase or exercise price per share less than the share purchase price of the 2008 Unit Offering without the consent of the subscriber holding purchased shares, warrants or warrant shares of the 2008 Unit Offering, then the subscriber shall have the right to apply the lowest such purchase price or exercise price of the offering or sale of such new securities to the purchase price of the purchased shares then hel d by the subscriber (and, if necessary, the Company will issue additional shares), the reset adjustments are also referred to as full reset adjustments.

F-27

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Due to the fact that these warrants have full reset adjustments based upon the issuance of equity securities by the Company in the future, they are subject to derivative liability treatment under Section 815-40-15 of the FASB Accounting Standard Codification (“Section 815-40-15”) (formerly FASB Emerging Issues Task Force (“EITF”) 07-5). Section 815-40-15 became effective for the Company on January 1, 2009 and as of that date the Warrants have been measured at fair value using a lattice model at each reporting period with gains and losses from the change in fair value of derivative liabilities recognized on the consolidated statement of income and comprehensive income.

Valuation of derivative liability

These warrants do not trade in an active securities market, as such, the Company developed a lattice model that values the derivative liability of the warrants based on a probability weighted discounted cash flow model. This model is based on future projections of the various potential outcomes. The features that were analyzed and incorporated into the model included the exercise feature and the full ratchet reset.

The fair values of the warrants treated as derivatives were computed using the following assumptions:

	December 31, 2009			January 1, 2009
Expected warrant life (year)		3.5			4.5
Expected volatility		169.00	%		172.00	%
Risk-free interest rate		2.61	%		1.72	%
Dividend yield		0.0	%		0.0	%

The risk-free interest rate is based on a yield curve of U.S treasury interest rates on the date of valuation based on the contractual life of the warrant remaining.  Expected dividend yield is based on our dividend history and anticipated dividend policy. Expected volatility is based on historical volatility for our common stock. We currently have no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants.

Exercise of warrants

On January 30, 2009, the Company issued 5,000 shares of its common stock for cash at $5.00 per share and received a cash payment of $25,000 in connection with the exercise of the warrant for 5,000 shares with an exercise price of $5.00 per share by one investor and warrants holder.

Warrant activities

The table below summarizes the Company’s warrants activity for the year ended December 31, 2009:

	Number of  Warrant Shares			Exercise Price Range  Per Share			Weighted Average Exercise Price			Fair Value at Date of Issuance			Aggregate  Intrinsic  Value
Balance, December 31, 2007		-			$	-		$	-	$	-			$	-
Granted		2,728,913				5.00			5.00		5,092,970				-
Canceled		-				-			-		-				-
Exercised		-				-			-		-				-
Expired		-				-			-		-				-
Balance, December 31, 2008		2,728,913			$	5.00		$	5.00	$	5,092,970			$	-
Granted		-				-			-		-				-
Canceled		-				-			-		-				-
Exercised		(5,000	)			5.00			5.00		(9,331	)			-
Expired		-				-			-		-				-
Balance, December 31, 2009		2,723,913			$	5.00		$	5.00	$	5,083,639			$	-
Earned and exercisable, December 31, 2009		2,723,913			$	5.00		$	5.00	$	5,083,639			$	-
Unvested, December 31, 2009		-			$	5.00		$	5.00	$	-			$	-

F-28

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2009:

		Warrants Outstanding					Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life  (in years)	Weighted Average Exercise Price		Number Exercisable	Average Remaining Contractual Life  (in years)	Weighted Average Exercise Price
$	5.00		2,723,913	4.00	$	5.00	2,723,913	4.00	$	5.00
$	5.00		2,723,913	4.00	$	5.00	2,723,913	4.00	$	5.00

NOTE 12 – STOCKHOLDERS’ EQUITY

Sale of common stock

On July 25, 2008 and July 31, 2008, the Company closed the first and second rounds of a private placement by raising $6,896,229 from eighty-two (82) investors through the sale of 22.9 units of its securities at an offering price of $300,000 per unit in a private placement. Each unit sold in the offering consisted of 100,000 shares of the Company’s common stock, $.001 par value per share at a per share purchase price of $3.00, and five (5) year warrants to purchase 100,000 shares of common stock with an exercise price of $5.00 per share (the “Warrants“).

On August 8, 2008 the Company closed the third round of the offering by raising $523,500 from ten (10) investors through the sale of 1.745 units of its securities at an offering price of $300,000 per unit.

On August 11, 2008 the Company closed the forth round of the offering by raising $40,200 from five (5) investors through the sale of 0.134 units of its securities at an offering price of $300,000 per unit.

The Company paid (i) FINRA member broker-dealers cash commissions of $162,660 and issued those firms five (5) year warrants to purchase a total of 99,650 shares of its common stock at $5.00 per share as compensation for services to the Company, (ii) due diligence fees to certain investors or their advisors in connection with the Offering aggregating $579,316 in cash and issued those firms five (5) year warrants to purchase a total of 142,614 shares of its common stock at $5.00 per share as compensation for services to the Company, and (iii) professional fees in the amount of $97,689 paid in cash in connection with the Offering.  The recipients of these fees included China Direct Investments, Inc., a subsidiary of China Direct, Inc. and a principal stockholder of the company.

In aggregate, the Company raised $7,459,929 in the offering from ninety-seven (97) investors through the sale of 24.87 units and after payment of cash commissions, broker dealer fee, due diligence fees and other costs associated with the Offering, the Company received net proceeds of $6,620,681, all of which will be used for construction of a scrap steel recycling facility in China as previously disclosed by the Company and general corporate working capital purposes.

On January 30, 2009, the Company received payment of $25,000 in cash in connection with the exercise of a warrant for 5,000 shares with an exercise price of $5.00 per share by one investor and issued 5,000 shares of its common stock to the investor and warrants holder.

Issuance of common stock for services

On October 15, 2008, the Company issued 6,000 shares of its common stock for services rendered valued at $3.00 per share for $18,000 (the estimated fair value on the date of grant).

On May 7, 2009, the Company issued 7,000 shares of its common stock to Hayden Communications as consideration for canceling an agreement to provide IR services.  These shares were valued at $1.50 per share for total consideration of $10,500 (the estimated fair value on the date of grant).

F-29

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Stock options

On June 27, 2008, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) and consummated a share purchase (the “Share Purchase”) with Armco & Metawise (H.K) Ltd. (“Armco”) and Feng Gao, who owned 100% of the outstanding shares of Armco (the “Armco Shareholder”).  Under the Share Purchase Agreement, the Company purchased from Ms. Gao, the sole shareholder of Armco (the “Armco Shareholder”), 100% of the issued and outstanding shares of Armco & Metawise’s capital stock for $6,890,000 by delivery of the Company’s purchase money promissory note (the “Share Purchase”).  In addition, the Company issued to Ms. Gao a stock option entitling Ms. Gao to purchase 5,300,000 shares of our common stock, par val ue $.001 per share (the “Common Stock”) at $1.30 per share expiring on December 31, 2008 and 2,000,000 shares at $5.00 per share expiring on June 30, 2010, vested immediately (the “Gao Option”).  On August 12, 2008, Ms. Gao exercised her option to purchase and the Company issued 5,300,000 Shares in exchange for the $6,890,000 note owed to Ms. Gao.  Accordingly, the 5,300,000 Shares issued to Ms. Gao represented approximately 69.7% of the issued and outstanding Shares of the Company giving effect to the cancellation of 7,694,000 Shares owned by Mr. Cox.

The fair value of the stock options issued in June 2008 under Share Purchase Agreement using the Black-Scholes Option Pricing Model was $0 at the date of grant.  For the year ended December 31, 2009, the Company did not record any stock-based compensation for shares vested.

The table below summarizes the Company’s stock option activity for the year ended December 31, 2009:

	Number of  Option Shares		Exercise Price Range  Per Share			Weighted Average Exercise Price			Fair Value at Date of Grant		Aggregate  Intrinsic  Value
Balance, December 31, 2007		-		$	-		$	-		-		$	-
Granted		2,000,000			5.00			5.00		*			*
Canceled		-			-			-					-
Exercised		-			-			-					-
Expired		-			-			-					-
Balance, December 31, 2008		2,000,000		$	5.00		$	5.00		*		$	-
Granted		-			-			-					-
Canceled		-			-			-					-
Exercised		-			-			-					-
Expired		-			-			-					-
Balance, December 31, 2009		2,000,000		$	5.00		$	5.00		*		$	-
Vested and exercisable, December 31, 2009		2,000,000		$	5.00		$	5.00		*		$	-
Unvested, December 31, 2009		-		$	5.00		$	5.00		*		$	-

* - Less than $1.00

F-30

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

The following table summarizes information concerning outstanding and exercisable stock options as of December 31, 2009:

		Options Outstanding					Options Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life  (in years)	Weighted Average Exercise Price		Number Exercisable	Average Remaining Contractual Life  (in years)	Weighted Average Exercise Price
$	5.00		2,000,000	0.50	$	5.00	2,000,000	0.50	$	5.00
$	5.00		2,000,000	0.50	$	5.00	2,000,000	0.50	$	5.00

Stock incentive plan

On October 26, 2009, the board of directors of the Company adopted the 2009 Stock Incentive Plan (the “2009 Stock Incentive Plan”). The board of directors also authorized 1,200,000 shares of the Company’s common stock to be reserved for issuance pursuant to the terms of the 2009 Stock Incentive Plan upon the grant of restricted stock awards, deferred stock grants, stock appreciation rights, stock awards and/or the exercise of options granted under the 2009 Stock Incentive(.

The purpose of the 2009 Stock Incentive Plan is to advance the interests of the Company’s company by providing an incentive to attract, retain and motivate highly qualified and competent persons who are important to us and upon whose efforts and judgment the success of the Company’s company is largely dependent. Grants to be made under the Plan will be limited to the Company’s employees, including employees of the Company’s subsidiaries, the Company’s directors and consultants to the Company. The recipient of any grant under the Plan, and the amount and terms of a specific grant, will be determined by the board of directors.

Should any option granted or stock awarded under the Plan expire or become unexercisable for any reason without having been exercised in full or fail to vest, the shares subject to the portion of the option not so exercised or lapsed will become available for subsequent stock or option grants.

On October 26, 200, the Company awarded 200,000 shares of its restricted common stock, par value $.001 per share, pursuant to the 2009 Stock Incentive Plan to Kexuan Yao, the Company’s Chief Executive Officer and 6,250 shares of its restricted common stock to Mr. William Thomson in conjunction with his appointment to the Company's board of directors.  The shares awarded to Mr. Yao vest 66,667 shares on December 15, 2010, 66,667 shares on December 15, 2011 and 66,666 shares on December 15, 2012.

On October 26, 2009 the Company has agreed to pay Mr. Thomson the sum of $20,000 and 6,250 shares of the Company’s restricted common stock which will vest 25% on March 31, 2010, 25% on June 30, 2010, 25% on September 30, 2010 and 25% on December 31, 2010.  The restricted stock vests only if Mr. Thomson is still a director of the Company on the vesting date (with limited exceptions), and the shares are eligible for the payment of dividends, if the board of directors were to declare dividends on the Company’s common stock.

The fair value of the common shares awarded under 2009 Stock Incentive Plan were valued at $676,500 using the close stock price of $3.28 per share as reported by the NASDAQ on October 26, 2009, the date of grant.  For the year ended December 31, 2009, the Company did not record any stock-based compensation for common shares awarded under 2009 Stock Incentive Plan as the Management determined that none of the common shares awarded has been vested at December 31, 2009.

F-31

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

The table below summarizes the Company’s 2009 Stock Incentive Plan activity for the year ended December 31, 2009:

	Number of shares		Fair Value at Date of Award
Balance, December 31, 2008
Granted		206,250	$	676,500
Canceled		-		-
Balance, December 31, 2009		206,250	$	676,500
Vested, December 31, 2009		-		-
Unvested, December 31, 2009		206,250	$	676,500

NOTE 13 – INCOME TAXES

Armco Metals is a non-operating holding company.  Armco & Metawise, the Company’s Hong Kong subsidiary is subject to Hong Kong SAR income taxes.  Henan, Armet and Lianyungang, the Company’s PRC subsidiaries are subject to PRC income taxes, file income tax returns under the Income Tax Law of the People’s Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws (the “PRC Income Tax Law”) accordingly.  Henan, Armet and Lianyungang derive substantially all of their income (loss) before income taxes and related tax expenses from PRC sources.

United States income tax

Armco Metals is incorporated in the State of Delaware and is subjected to United States of America tax law.

Hong Kong SAR income tax

Armco & Metawise is registered and operates in the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of China (“PRC”) and is subject to HK SAR tax law.  Armco & Metawise’s statutory income tax rate is 16.0% and there were no significant differences between income reported for financial reporting purposes and income reported for income tax purposes for the year ended December 31, 2009 and 2008.

PRC Tax

Armet, Henan and Lianyungang are governed by and file separate income tax returns under the Income Tax Law of the People’s Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws (the “PRC Income Tax Law”), which, until January 2008, generally subject to tax at a statutory rate of 33% (30% state income tax plus 3% local income tax) on income reported in the statutory financial statements after appropriate tax adjustments.  On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), effective January 1, 2008.  Under the New CIT Law, the corporate income tax rate applicable to all Companies, including both domestic and foreign- invested companies, will be 25%.  However, tax concession granted to eligible companies prior to March 16, 2007 will be grand fathered in.

Henan is registered and operates in the City of Zhengzhou, Henan Province, PRC.  No provision for income taxes has been made as Henan had net operating loss (“NOL”) carry-forwards for the year ended December 31, 2009 and 2008.  Henan’s statutory tax rate for relevant periods is 25% for the year ended December 31, 2009 and 2008.

F-32

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Armet is registered and operates in the LianYunGang Economic and Technology Development Zone, City of Lianyungang, Jiangsu Province, PRC, and is recognized as a “Manufacturing Enterprise Located in Special Economic Zone”.  In accordance with the relevant income tax laws, the profits of Armet, if any, are fully exempt from income tax for year 2008 and 2009, followed by a 50% exemption for the following three calendar years from 2010 through 2012 (“tax holidays”).  Armet is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification as of December 31, 2009.  Armet’s statutory tax rate for relevant periods is 25% for the year ended December 31, 2009 and 2008.

Lianyungang is registered and operates in the LianYunGang Economic and Technology Development Zone, City of Lianyungang, Jiangsu Province, PRC.  Armet is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification as of December 31, 2009.  Armet’s statutory tax rate for relevant periods is 25% for the period from June 4, 2009 (inception) through December 31, 2009.

Deferred tax assets

At December 31, 2009, the Company has available for income tax purposes net operating loss (“NOL”) carry-forwards of $2,625,432 that may be used to offset future taxable income through the year ending December 31, 2014.  No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying consolidated financial statements since the Company believes that the realization of its net deferred tax assets of approximately $656,358 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance of $656,358.

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards.  The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.  The valuation allowance increased approximately $259,078 and $24,929 for the year ended December 31, 2009 and 2008, respectively.

Components of deferred tax assets as of December 31, 2009 and 2008 are as follows:

	December 31, 2009			December 31, 2008
Net deferred tax assets – Non-current:
Expected income tax benefit from NOL carry-forwards	$	656,358			397,280
Cumulative effect of statutory reduction of enacted income tax rate effective January 1, 2008		-			-
Expected income tax benefit from NOL carry-forwards, net of cumulative effect of statutory reduction of enacted income tax rate		656,358			397,280
Less valuation allowance		(656,358	)		(397,280	)
Deferred tax assets, net of valuation allowance	$	-		$	-

F-33

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Income taxes in the consolidated statements of income and comprehensive income

A reconciliation of the Chinese statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

	For the Year Ended
	December 31, 2009			December 31, 2008
Chinese statutory income tax rate		25.0	%		25.0	%
Increase (reduction) in income taxes resulting from:
Net operating loss (“NOL”) carry-forwards	$	(25.0	)		(25.0	)
Tax holiday		-			-
Effective income tax rate	$	-		$	-

NOTE 14 – COMMITMENTS AND CONTINGENCIES

Employment agreement

On December 18, 2008, the Company entered into an employment agreement (“Employment Agreement”) with Chairman and Chief Executive Officer (“Employee”) for a term of three (3) years commencing on January 1, 2009 (“Employment Term”).  Pursuant to the Employment Agreement, Employee shall devote substantially all his business time and efforts to the business of the Company; provided, however, that it is understood and agreed that, while Employee may devote time to other business matters in which he may have an interest, in the event of a conflict, Employee’s first and primary responsibility shall be to the performance of his duties for the Company.  In consideration with the duties and responsibilities as described above Employee shall be entitled to the compensation and benefi ts hereinafter described in subparagraphs (A) through (D) (such compensation and benefits being hereinafter referred to as “ Compensation Benefits”).

A. BASE SALARY.  The Company shall pay Employee a base salary (the “Base Salary”) of $73,000 per annum for the period commencing on January 1, 2009 and ending on December 31, 2009.

B. COMPENSATION ADJUSTMENT.  The Base Salary and Employee’s other compensation will be reviewed by the Board of Directors of the Company (the “Board”) at least annually and may be increased (but not decreased) from time to time as the Board may determine.

F-34

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

C. PARTICIPATION IN BENEFIT PLANS.  During the Employment Term, Employee shall be eligible to participate in all Employee benefit plans and arrangements now in effect or which may hereafter be established, including, without limitation, all life, group insurance and medical care plans and all disability, retirement and other Employee benefit plans of the Company.  Should the Employee not want to participate in the Company’s health plan, with Board approval, the company will reimburse the Employee for the expense incurred in participating in another plan.

D. OTHER PROVISIONS. During the Employment Term, Employee shall be entitled to 2 weeks paid vacation per annum and an automobile allowance of $15 per month. Employee shall be reimbursed.

This Employment Agreement shall terminate as a result of any of the following events: (a) death, (b) disability, (c) voluntary resignation, or (d) termination by the Company with Cause, where “Cause” shall mean: (i) final non-appealable adjudication of Employee of a felony, which would have a material or adverse effect on the business of the Company; or (ii) the determination of the Board (other than Employee) that Employee has engaged in intentional misconduct or the gross neglect of his duties, which has a continuing material adverse effect on the business of the Company, or (e) termination by the Company for any reason other than Cause. In the event that Employee’s employment is terminated pursuant to Events (a), (b), or (e) above, the Company shall pay to Employee and or his estate, (i) all of the Compe nsation Benefits Employee is entitled to through the Date of Termination and (ii) all Incentive Compensation, benefits and other compensation, if any, due and owing as of the Date of Termination.

Uncommitted trade credit facilities

The Company entered into uncommitted trade credit facilities with certain financial institutions.  Substantially all of the uncommitted trade credit facilities were guaranteed by Mr. Yao, the Company’s chairman, Chief Executive Officer and stockholder.  The uncommitted trade credit facilities at December 31, 2009 or 2008 were as follows:

	Date of Expiration		Total Facilities		Facilities Used			Facilities Available
Armco Hong Kong
DBS (Hong Kong) Limited		April 21, 2010	$	12,000,000	$	-		$	12,000,000
ING Bank, N.V. Hong Kong Branch		December 7, 2010		15,000,000		-			15,000,000
RZB (Beijing) Branch		May 31, 2010		10,000,000		12,277,218	*		-
Henan Armco
Guangdong Development Bank Zhengzhou Branch		October 20, 2010		7,312,935		4,598,081	**		2,714,854
			$	44,312,935	$	16,875,299		$	29,714,854

* The increase to $12,277,218 was verbally approved by the bank and the loan payable of $12,277,218 at December 31, 2009 was repaid on February 4, 2010 (See Note 8 – Loans payable).

** Loan payable of $4,598,081 at December 31, 2009 was repaid on March 24, 2010 (See Note 8 – Loans payable).

F-35

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Line of credit facility

The Company entered into a line of credit facility (“Line of Credit”) in the amount of RMB70 million (equivalent to $10,238,109 at December 31, 2009) with a financial institution on September 4, 2009, expiring September 3, 2012, which can be drawn in the form of a loan payable or a bank acceptance payable.  The line of credit facility was collateralized by the building and land use right of Armet.  The Company drew RMB60 million (equivalent to $8,775,522 at December 31, 2009) of the Line of Credit in the form of loans payable on September 8, 2009 (see Note 9) with RMB10 million (equivalent to $1,462,587 at December 31, 2009) remaining available to the Company at December 31, 2009.

Operating lease from Chairman, CEO and Stockholder

On January 1, 2006, Henan entered into a non-cancellable operating lease for its 176.37 square meter commercial office space in the City of Zhengzhou, Henan Province, PRC from Chairman, Chief Executive Officer and stockholder of the Company for RMB 10,000 per month, which expired on December 31, 2008 and has been extended through December 31, 2011.  Total lease payments for the year ended December 31, 2009 and 2008 amounted to RMB120,000 per year (equivalent to $17,542 and $17,272, respectively).  Future minimum lease payments required under the non-cancelable operating lease are RMB120,000 per year (equivalent to $17,542 at December 31, 2009) for 2010 through 2011.

Operating lease agreement from Prime Armet Group, Inc., an entity controlled by Mr. Yao, its Chairman, CEO and Stockholder

On October 1, 2009, the Company entered into a non-cancellable operating lease for its commercial office space in California expiring September 30, 2010.  Future minimum lease payments required under the non-cancelable operating lease are $1,000 per month or $9,000 for the remaining term of the lease in 2012.

Total Lease arrangements

Rent expense from our office leases for 2009 and 2008 were $58,000 and 42,000, respectively.  We did not have any minimum, contingent, or sublease arrangements in these leases.

The table below reflects our minimum commitments for our various office leases in the U.S. and China for the years ended December 31, 2010 and thereafter:

Period	Total
Period Ended December 31, 2010	$	29,544
Period Ended December 31, 2011		29,544
Period Ended December 31, 2012		9,000
Period Ended December 31, 2013		--
Period Ended December 31, 2014		--
Thereafter		--
	$	68,088

F-36

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

NOTE 15 – CONCENTRATIONS AND CREDIT RISK

Customers and Credit Concentrations

Customer concentrations for the year ended December 31, 2009 and 2008 and credit concentrations at December 31, 2009 and 2008 are as follows:

	Net Sales for the Year Ended						Accounts Receivable At
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
Customer #206010 LianYunGang Jiaxin		22.5	%		21.4	%		46.1	%		50.9	%
Customer #122015 ZheJiang JuXiong		-	%		6.8	%		-	%		21.9	%
Customer #206048 Shandong YongJia		10.0	%		-	%		-	%		-	%
Customer #122007 QingDao HuaQing		-	%		7.3	%		3.6	%		23.8	%
Customer #206030 Tianjin Yayi		-	%		27.3	%		-	%		-	%
Customer #122018 Sundial Metals and Mineral		21.9	%			%		-	%		-	%
Customer #122003 Zhongji NingBo (Significant Business Party)		25.1	%		33.8	%		50.0	%		2.3	%
									%
		79.5	%		96.6	%		99.7	%		98.9	%

A reduction in sales from or loss of such customers would have a material adverse effect on the Company’s results of operations and financial condition.

Vendor Concentrations

Vendor purchase concentrations for the year ended December 31, 2009 and 2008 and accounts payable concentration at December 31, 2009 2008 and are as follows:

	Net Purchases for the Year Ended						Accounts Payable At
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
Vendor #126010 ZhongJi NingBo (Significant Business Party)		-	%		20.0	%		16.5	%		59.3	%
Vendor #204006 BestonHoldings		0.2	%		15.3	%		22.7	%		32.2	%
Vendor #126026 Henan Huichuang		11.2	%		-	%		-	%		-	%
Vendor #204005 Nav Minerals		0.4	%		15.3	%		-	%		-	%
Vendor #204031 Novo Commodities Ltd		36.4	%		-	%		-	%		-	%
Vendor #204030 Granton Natrusl Presoures		10.1	%		-	%		-	%		-	%
Vendor #126027 Anhui Huan Tai		15.3	%		-			45.5	%		-	%
Vendor #1133002 LianYunGang JiaXin		-			-			14.9	%		-	%
Vendor #126021 TianJin JiaXuanHua		-	%		30.7	%		-	%		0.5	%
Vendor #204024 Honor Resouse		-	%		16.3	%		-	%		-	%
		73.6	%		97.6	%		99.6	%		92.0	%

F-37

China Armco Metals, Inc. and Subsidiaries

December 31, 2009 and 2008

Notes to the Consolidated Financial Statements

Significant business party

The Company sells to and purchases from a significant business party (“Significant Business Party”) ferrous and non-ferrous ore and metals.  A reduction in sales from or loss of the Significant Business Party would have a material adverse effect on the Company’s results of operations and financial condition.

Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.  As of December 31, 2009, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, none of which are insured.  However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

Foreign currency risk

The Company is exposed to fluctuations in foreign currencies for transactions denominated in currencies other than RMB, the functional currency due to the fact the majority of the Company’s purchasing activities are transacted in foreign currencies.  The Company had no foreign currency hedges in place at December 31, 2009 to reduce such exposure.  The Company’s previous forward foreign currency exchange contracts expired on August 2, 2008 and the total loss in fair value on foreign currency hedges outstanding as of December 31, 2008 was $25,009.

NOTE 16 - FOREIGN OPERATIONS

Operations

Substantially all of the Company’s operations are carried out and all of its assets are located in the PRC.  Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC.  The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency fluctuation and remittances and methods of taxation, among other things.

Dividends and Reserves

Under the laws of the PRC, net income after taxation can only be distributed as dividends after appropriation has been made for the following: (i) cumulative prior years’ losses, if any; (ii) allocations to the “Statutory Surplus Reserve” of at least 10% of net income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company’s registered capital; (iii) allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company’s “Statutory Common Welfare Fund”, which is established for the purpose of providing employee facilities and other collective benefits to employees in PRC; and (iv) allocations to any discretionary surplus reserve, if approved by stockholders.

As of December 31, 2009, the Company had no Statutory Surplus Reserve and the Statutory Common Welfare Fund established and segregated in retained earnings.

NOTE 17 – SUBSEQUENT EVENTS

The Company has evaluated all events that occurred after the balance sheet date of December 31, 2009 through March 31, 2010, the date when the financial statements were issued.  The Management of the Company determined that there were certain reportable subsequent events to be disclosed as follows:

 During March 2010, approximately 60 investors holding the Company’s common stock purchase warrants exercised 167,740 warrants on a cashless basis resulting in the issuance of 76,679 shares of the Company’s common stock and exercised 1,310,346 warrants at an exercise price of $5.00 per warrant resulting in proceeds to the Company of $6,551,730.  As of March 30, 2010 1,250,828 common stock purchase warrants remain outstanding.

F-38

China Armco Metals, Inc. and Subsidiaries

Valuation and Qualifying Accounts

For the Year Ended December 31, 2009 and 2008

	Balance at beginning of period		Add Charge to Income		Deduct bad debt written off			Add translation adjustment		Balance at End of period
For the Year Ended December 31, 2008:
Allowance for doubtful accounts	$	-	$	79,212	$	(-	)	$	-	$	79,212
For the Year Ended December 31, 2009:
Allowance for doubtful accounts	$	79,212	$	-	$	(79,212	)	$	-	$	-

F-39

EX-10.14

Exhibit 10.[__]

[Translated from Chinese to English]

Loan Agreement (medium / long term)

Borrower:  Armet (Lianyungang) Renewable Resources Co., Ltd.

Business License Number: 320700400007412

Legal Representative: Kexuan Yao

Address: Lianyungang Development Zone                                                                           Zip code: 222047

Bank financial institutions and account number: Bank of China, Lianyungang Development Zone Branch43245108093001

Phone: 0518-2239258                                            Fax: 0518-82239257

Lender: Bank of China Ltd., Lianyungang Economic and Technological Development Zone Branch

Legal representative: Tao Pang

Address: 15 Kunlun Shan Road, Lianyungang Economic and Technological Development Zone, Jiangsu.    Zip Code: 222047

Phone: 0518 -85319767                                                      Fax: 0518-85319868

After consultation, the Borrower and the Lender reached an agreement regarding the Lender lending medium / long term RMB loan to the Borrower, and thus established this contract.

Article 1                      Loan Amount

Loan amount:  RMB 70,000,000

At the time when actual withdraw of the loan is made by the Borrower, if due to the fluctuation of the exchange rate, after conversion base on the exchange rate of the date of withdraw,  if the remaining credit balance under above Line of Credit Agreement is more than the amount agreed in the agreement, the Lender has the right to terminate the agreement or decline the Borrower’s withdraw request; If the remaining credit balance is less than the loan amount under this agreement,  the Lender has the right to adjust and reduce the loan amount under this agreement, and set up the loan amount according to the remaining credit balance. (This is an optional term, the management procedure for the limitation of credits of each industry will decide whether it’s applicable, if not applicable, please delete.)

Article 2                      Term

The term of the loan: 36 month. Count from the actual withdraw date, if it is withdrawn with multiple payments, then count from the first actual withdraw date.

The Borrower shall withdraw strictly base on the withdraw schedule, if the actual withdraw date is later than the agreed date, the Borrower shall still pay back the loan base on the agreed date in this agreement.

Article 3                      Purpose of the Loan

The purpose of the loan: the construction on the first phase (1 million ton project) of a metal recycling construction that has 2million ton annual production capacity.

Without the Lender’s approval in writing, the Borrower can not change the purpose of the loan, including but not limited to using the loan on investing stock and other type of securities, the loan may not use for any projects that are forbidden by any law, regulatory, government policy or projects that are not approved by the proper legal authorities, as well as any projects or usage that are forbidden to use bank loan on.

Article 4                      Loan Interest Calculation and Settlement

 1. Loan Interest

The loan interest is the (2) of the following:

(1) Fixed interest: annual interest _x_%, the interest rate does not change during this Agreement term.

(2) Floating rate, the floating period is 12month.

From the actual withdraw date ( if it is several withdraws, then from the first actual withdraw date), the interest will be reset once every 12 month. The interest reset date is the corresponding day of the actual withdraw date. If there is not a corresponding day in the current month, the last day of the month will be the interest reset date.

A. the initial interest rate of every withdraw will be the withdrawn day’s three-year benchmark lending rate promulgated by the People’s Bank of China with a 5% increase.

B. After each floating period, the interest rate will be the interest reset day’s three-year benchmark lending rate promulgated by the People’s Bank of China with a 5% increase, as the interest rate for the next floating period.

2.  Interest Calculation

The interest is calculated from the actual withdraw date, base on the actual withdraw amount and the days of loan outstanding

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Interest calculation formula:  interest = capital X actual days X daily interest rate

The daily interest rate is calculated base on 360 days per year,

Calculation formula: daily interest rate = annual interest rate / 360

3. Interest Settlement Method

The Borrower will settle interest payment with clause (1) of the following:

(1) Settle interest on quarter basis, the 20th of the last month in each quarter as interest settlement date, and the 21st is the due date of interest payment.

(2) Settle interest on monthly basis, the 20th of each month is the settlement date, and the due date is the 21st.

If the last payment date of loan capital is not the interest payment date, then the last payment date of the loan capital will be regard as the interest payment date, the Borrower shall pay off any unpaid interest.

4. Penalty

(1) If the Borrower does not pay back the loan according to the agreed schedule, the interest of the overdue payment will be calculated with a penalty interest rate starting from the day of late payment, until both the capital and interest have been paid.

The penalty interest rate will be 40% in addition to the loan interest rate in Article 1.

(2) If the Borrower does not use the loan for the agreed on purpose, the interest of the misappropriated part of the loan will be calculated at the penalty interest rate, until both the capital and interest have been paid.

The misappropriated interest rate will be 70% extra on top of the loan interest rate in Article 1.

(3) As for amount that is both overdue and misappropriated, the interest will be calculated based on the penalty interest rate for misappropriation.

(4) For the interest that was not paid on time, interest settlement method shall be based on paragraph 3 of this Article, during the term of the loan, the compounding interest shall be based on paragraph 1 of this Article, and the compounding interest of the overdue loan shall be calculated with the penalty interest rate.

(5) Collecting penalty interest and compound interest, adjustments will be base on the agreed loan interest rate from this agreement, calculate penalty interest and compound interest separately from the date that the adjustment has been made.

Article 5  Withdraw Conditions. The Borrower should fulfill the below prerequisites before making withdraw:

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1. This contract and its supplements are in effect.

2. The Borrower has, at the request of the Lender, provided guarantee, the guarantee contract has been in effect, with completed all legal reviews, registration and/or procedure to put into record.

3. The Borrower has provided and established with the Lender, all Borrower documentations, receipts, stamps, personals list, and signature samples related to this contract, and fill out any related forms.

4. The Borrower has, at the request of the Lender, open the account required in order to fulfill this Agreement, as instructed in this Agreement.

5. 15 banking days before withdraw, provide to the Lender a written application of withdraw and documentations proving the purpose of the loan, and proceed with any related procedures.

6. The Borrower has provided to the Lender all the board of director (or other department) meeting minuets and authorizations signed in agreement to perform to this contract; (This is optional, please confirm, before signing of this contract, regarding this contract, whether the Borrower has received the approval and authorization.)

7. Other legal requirements, or terms agreed by both parties regarding withdraw of funds: __N/A__.  If the terms are not fulfill, the Lender has the rights to refuse the withdraw application of the Borrower, with the exception of the consent of the Lender.

Article 6. Time and Method of Withdrawals

1. The Borrower is the follow the withdraw time and method stated in (2):

(1) One time withdraw of full amount made at YYYY/MM/DD

(2) Complete withdraw of full amount within 180 days as of 2009-09-02

(3) Multiple withdraws following the below schedule.

Time of withdraw	Withdraw amount
N/A	N/A
N/A	N/A
N/A	N/A

2. The Lender has the rights to refused the withdraw application for any residual amount not withdraw by the above stated time.

If the Lender agrees to release the funds, the Lender has the rights to receive a compensation of .05% of the residual amount, if the Lender refused the withdraw application, the Lender has the rights to receive a compensation of .05% of the residual amount.

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Article 7 Repayment of Loan

1. Other than if the parties had made additional agreements, the Borrower should make repayments to the loan under this contract according to (2) of the below payment schedules.

(1) At the expiration of the loan, return the full amount of this loan.

(2) Make multiple payments as accordance to the below schedule:

Time of Payment	Payment amount
2010-05-25	15000000.00
2011-08-25	30000000.00
2012-08-25	25000000.00

If the Borrower needs to make changes to the above payment schedule, the Borrower must send written application to the Lender 15 banking days prior to the payment date, a change in the payment schedule requires written consent of both parties.

2. Unless both parties have other arrangements, when the Borrower defaults on his interest as well as principle, the Lender has the right to decide on to the order of payments of principle and interest.  Under the situation where the Borrower has multiple debt repayments schedules, the Lender has the right to decide which payment the Borrower should pay first.

3. Unless both parties have other arrangements, the Borrower can repay ahead of schedule.  However, the Borrower needs to provide written notification to the Lender 15 bank business days prior.  The repayment is applied to the last scheduled payment first.

The Lender has the right to charge 5% fee on the prepayment amount as early prepayment compensation.

 4. Borrower follows the following type of repayment arrangement:

1.  Borrower has to establish a banking account and put in such account the amount of scheduled interest 15 banking days prior to the payment date.  The Lender has the right to automatically take the scheduled payment out of this account on the due date.

Repayment account name: Armet (Lianyungang) Renewable Resources Co., Ltd..

Account #: 43245108093001

2. Both parties decide to have other repayment arrangements: ___x______

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Article 8 Guarantee (note: fill in where it applies and ignore the others)

1.   The arrangements of the guarantee for the liability under this contract are:

__This contract belongs to the guarantor ___x___ and the Lender signed number is__x___{the highest value guarantee contract}/__{the highest value collateral contract}/ ___{the highest value pledge contract}

__ This contract belongs to the guarantor ___x___ and the Lender signed number is__x___{the highest value guarantee contract}/__{the highest value collateral contract}/ ___{the highest value pledge contract}  In addition, provide____x____guarantee , and sign guarantee contract accordingly.

__Henan Caoyang Steel Ltd.Co. to provide unlimited joint responsibility guarantee and sign the 2009 LianZhong Bank’s KaiBao Zi 21-1’s Guarantee contract.

__ Henan Armco & Metawise Trading Co., Ltd. to provide unlimited joint responsibility guarantee and sign the 2009 LianZhong bank’s KaiBao Zi 21-2’s Guarantee contract.

__YaoKeXuan to provide unlimited joint responsibility guarantee and sign the 2009 LianZhong Bank’s KaiBaoZi 21-3’s Guarantee contract.

__ ZhuLi to provide unlimited joint responsibility guarantee and sign the 2009 LianZhong Bank’s KaiBaoZi 21-4’s Guarantee contract.

__Armet (Lianyungang) Renewable Resources Co., Ltd. to provide collateral guarantee and sign the 2009 LianZhong Bank’s kaiBaoZi 21-5’s Guarantee contract.

__other guarantee arrangements

2.   If the Borrower or the guarantor are involved in situations that could compromise their ability to perform under the contract terms, or if the guarantee contract becomes invalid,  canceled, or the Borrower/ guarantor’s financial conditions deteriorate or are involve in law suits, or any other conditions that can compromise their ability to performs the terms of the contracts, or if the guarantor and the Borrower defaults on other contracts, or that the collateral depreciates in value, is destroyed, or seized, causing the collateral’s value to deteriorate,  then the Lender has the right to request the Borrower provide additional guarantors/collaterals.

Article 9 Insurance

The Borrower has to buy insurance on the equipment, construction, transportation and other business related functions during the time that the business is in operation from an insurance company that the Lender approves.  The terms should be based on Lender’s requirement and the insured amount should not be less than the borrowed amount.

- 6 -

The Borrower should submit the original insurance agreement to the Lender within 5 days after this contract takes effect.  Unless the interest, principal, and fees under this contract have been fully paid off, the Borrower cannot stop the insurance.  If the Borrower terminates the insurance, then the Lender has the right to buy insurance and have the Borrower pay for the fees.  The Borrower will be responsible for any losses caused to the Lender during the period without insurance.

The Borrower has to submit written notification to the Lender within 3 days of filing a claim with the insurance company.  Losses or fees caused by not submitting a claim or not notifying the Lender in time will be the responsibility of the Borrower.

Article 10 Declaration and Commitment

1.   Borrower’s declaration is as follows:

1.   Borrower will follow the rules and regulations to execute the signed terms and conditions to the best of their ability

2.   The signed contract represents Borrower’s true intention to borrow and the willingness to repay under the terms.  The Borrower has or will obtain the necessary authorizations and registrations for the contract.

3.   The supporting documents provided to the Lender including financial reports, business agreements, licenses, etc. are all real, complete, accurate, and valid.

4.   Borrower’s statements to the Lender on the business transactions and activities are real, and legal.  Borrower is not engaged in money laundering or any other illegal activities.

5.   Borrower did not lie or hide adverse material events that may cause the inability to perform under this Agreement

6.   Borrower’s other declaration: __________

2.   Borrower’s commitment is as follows:

1.   Based on Lender’s requirement, will provide financial reports (including but not limited to monthly, quarterly, and annual reports) and other related reports in a timely fashion.

2.   If the Borrower have or will sign with the guarantor of this contract a counter-guarantee or related agreements, such agreement will not harm the Lender’s interests under this contract.

3.   Will allow Lender to inspect and monitor credit and will provide support and coordination.

4.   If there are situations that will cause the inability for Borrower as well as the guarantor to unable to perform the terms of this contract, including but not limited to spin offs, mergers, joint ventures, reorganizations, reforms, going public, etc. that will cause the reduction in registered capital, asset or stock transfer, increased liability, or new debt on the collateral, mortgage be confiscated, dissolved, repealed, or bankrupted, etc. or involved in the case of the law suit, or business trouble and financial difficulty, or Borrower broke this Agreement in other case, the Borrower should inform the Lender in time.

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If any actions the Borrower takes would be harmful to his capability of payment, the Borrower must receive agreement from the Lender:

(5)  The payment of the loan from the Borrower to the Lender should have higher priority than payment to its shareholder loans, but not against similar loans from other creditors. :

(6) In the case that the annual net profit after tax is zero or negative, or net profit after tax is not enough to cover the accumulated lost of the previous years, or profit before tax was not used to cover the principal, interest and cost he should pay back, or profit before tax is not enough to cover the principal, interest and cost of the next term, the Borrower should not distribute any share interest, dividend in any way.

(7) The Borrower should not dispose the property in any way to lower his capability of paying back, and promise that the total amount to be vouched for others cannot exceed the 0.5 times of the its net assets, and the total amount and single value be vouched for others cannot be more than the allowed limit by the company rule.

(8)  The Borrower should promise:  when the permanent assets built in “ first phase (1 million ton project) of a metal recycling construction that has 2million ton annual production capacity” and the main facility can be used as mortgage, should be guaranteed to the Lender as additional collateral in time, and promise not to guaranty to the third party before the equipment is guaranteed to the Lender as mortgage.

(9) The Borrower should promise:  before the remaining registered funds are made available, the loan withdrawn will not exceed $40000000.

(10) The other items the Borrower should promised: __________________________

Article 11. The internal disclosure of the relevant transaction in the Borrower’s group (optional, may delete if not applicable)

The Borrower is classified as the group client according to the < Risk management guide of authorized trust by commercial bank group >.  The Borrower should report the relevant transaction, transaction relating to more than 10% of the net assets, to the Lender in time. Include the various relevant relationships, transaction items and transaction nature, transaction monetary value or relevant percentage, price policy (include nonmonetary transaction or symbolic value transaction).

The Lender has the right to stop paying the unused loan to the Borrower, and ask back all or part of the loan interest under the following cases: false contract with the relevant party, using falsified documentations or certifications as bases or collaterals to receive cash or credit from the bank.  In the case of the important merger, purchasing, recombining, when the Lender think it may possibly affect the loan security. Intent to escape the bank claims through relevant transactions. The other cases provided by Article 18.

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Article 12.  Violation of agreement and measures to take

One of the followings is constituted or taken as the violation of an agreement by the Borrower under this Agreement:

1.   The Borrower does not fulfill the obligation of the payment and settlement according to the provision of this Agreement.

2.   The Borrower does not use the acquired money to the provided purpose according to the provision of this Agreement.

3.   The statements the Borrower signed in this Agreement is not true, or Borrower does not keep the promise made in this Agreement.

4.   In the situation provided in paragraph 0.2.4 of this Agreement, the Lender think it possibly affect the financial situation or the capability to fulfill the obligation of the Borrower or guarantor, and the Borrower does not provide the new guaranty, change the guarantor according to the current contract.

5.   The Borrower violates the other agreements according to the provisions and obligations of the current contract.

6.   The Borrower violates the agreements in other provisions of this Agreement with the Lender or other constitutions of the Chinese bank limited.

7.   The guarantor violates the agreements of the guaranty contract, or violates the agreements in other provisions of this Agreement with the Lender or other constitutions of the Chinese bank limited.

8.   The Borrower closes the business or the dissolution, revocation or bankrupt.

9.   The progress of the project is serious delayed, or the cost of the project exceeds the budget proportion approved by the Lender.

10.   The quality of the project is not satisfied the national standard or the business standard (optional)

11.   During the credit period authorized by the Lender, the Borrower lends the funds to relevant business.

When the violations mentioned above happen, the Lender has the right to take the following measures separately or simultaneously according to the specific situation.

1.   Request the Borrower or the guarantor to correct their violation in certain given time.

- 9 -

2.   Totally or partly decrease, suspend or terminate the amount of credit line to the Borrower,

3.   Totally or partly decrease, suspend or terminate the withdrawing or other application from the Borrower under the provision of current contract or other contract between the Borrower and the Lender. Totally or partly suspend or terminate the further release and process of the unreleased loan and the unprocessed trading finance.

4.   Declare that all or part of the outstanding loans / principal and interest from the trading financing and other payables under the other contract between the Borrower and the Lender is due immediately.

5.   Terminate or cancel the current contract, totally or partly terminate or cancel the other contracts between the Borrower and the Lender.

6.   Require the Borrower to compensate the loss absorbed by the Lender due to the violation of the agreement.

7.   Retain the money balance from the Borrower’s account opened in the Lender or other constitutions of the Chinese bank limited to make the settlement of the total or partial of the debt that the Borrower owes to the Lender under the current contract. Take the outstanding debt as the due debt. If the currency of the account is different from the Lender’s account currency, conversion should be made according to the market rate applicable to the Lender when settling the account. The notification can be made either before or after the above action is taken.

8.   Perform security interests

9.   Require the guarantor to take the guaranty responsibility.

10.   Any other measures the Lender thinks it is necessary and possible to take.

Article 13.  Rights reserved

If one party does not perform part or all of the rights under the provision of the current contract, or does not require another party to perform, take part or total of the obligations, responsibilities. It will not mean that the party gives up the rights or waive the obligations and the responsibilities.

Any tolerance, extension or delay that one party allows another party to exercise the rights under the provision of the current contract, will not affect any entitled rights under the current contract,  the law and rule, neither take it as giving up of the rights.

- 10 -

Article 14.  Change, modification and termination

The contract is may be take change or modification in written under the negotiation and agreement of both sides, any change or modification will become the Indivisible, component part of this Agreement.

The invalidity of any clauses shall not impair the legal force of other clauses of this Agreement unless they are amended as required by laws or agreed by parties involved.

Article 15 Applied Laws and Disputes Resolve

This contract is subject to the laws of People’s Republic of China.

After this Agreement takes effect, any disputes during and/or related to the execution of this Agreement shall be resolved through negotiation. If negotiation can’t resolve the issues, either party can file complaint to the court in the residence of the Lender or other subsidiaries controlled by Bank of China that exercises right in accordance with this contract.

Under the circumstance that the dispute does not impact the execution of other clauses, the parties shall continue the execution of other clauses.

Article 16 Expenses

Except the items specifically indicated by the parties involved, the Borrower shall pay the expenses (including but not limited to legal fees) occurred during the signing and execution of this contract and disputes resolve.

Article 17 Attachment

The following and other potential attachments approved by both parties are integral parts of this contract and have the same legal force:

1.   Withdrawal Form (Format)

2.   Receipt of Loan.

Article 18 Others

1.   Without written consent from the Lender, the Borrower shall not transfer any rights or obligations under this contract to third parties.

2.   If business needs occur, the Borrower agrees the Lender to entrust other institutions under   Bank of China with rights and obligations stipulated in this contrast or transfer the loan to other institutions under Bank of China. Under these circumstances, the institutions of Bank of China have the right to file complaint, arbitration, or request for compulsory enforcement on any disputes related to this contract.

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3.   If not conflicting with other clauses, this Agreement has legal bindings on both parties and their perspective heirs and assignees.

4.   Except for the circumstances specified additionally, both parties shall designate the residence address in this contract as the mailing/contact address, and ensure to update the counterpart promptly if the address has changed.

5.   The transactions under this contract serve independent interests of each party. In accordance with laws and regulations, the related parties of Lender shall not impair the fairness of the transactions by taking advantage of their relationships with Lender.

6.   The headings and business terms in this contract are used for representation purpose, having no explanatory force to the nature of the clauses and mutual rights and obligations of parties involved.

Article 19 Effect

This contract shall take effect upon signatures with official seal by the authorized representatives of Lender and Borrower.

There are seven original copies, one for the Lender, one for the Borrower, and five for warrantors. Each copy has the same legal force.

Borrower: Armet (Lianyungang) Renewable Resources Co., Ltd.

Authorized Representative: /s/ Kexuan Yao (with company seal)

Date: 9-4-2009

Lender: Bank of China

                  Lianyungang Sub-branch in Economic Technology Development Zone

Authorized Representative /s/ (signed with sub-branch seal)

Date: 9-4-2009

EX-10.15 3 cnamexdbs.htm BANKING FACILITIES AGREEMENT BETWEEN ARMCO & METAWISE (H.K.) LIMITED AND DBS BANK (HONG KONG) LIMITED DATED APRIL 22, 2009

DBS Bank

Date: 22 April 2009

Our ref: P/HBHBC/00020/09

Armco & Metawise (H.K.) Limited

Room 1407

China Resources Building

26 Harbour Road

Wanchai, Hong Kong

BANKING FACILITIES

Dear Sirs,

DBS Bank (Hong Kong) Limited (the “Bank”, which expression shall include its successors and assigns) is pleased to advise that it is prepared to consider making available or continuing to make available the banking facilities detailed below (the “Facilities”) to the Borrower described below, subject to the provisions of this facility letter and the attached “Terms and Conditions Governing Banking Facilities and Services”.

A. BORROWER:

Armco & Metawise (H.K.) Limited

B. FACILITY LIMITS:

Type(s) of Facility                                                                           Facility Limit(s)

Back to Back Letter of Credit                                                                                     USD 12,000,000.-

C. PRICING AND CONDITIONS:

Unless otherwise provided herein, interest and commission(s) on the Facilities will be charged at the Bank’s standard rate that may be varied from time to time at the Bank’s discretion.

Back to Back Letter of Credit (“Back to Back L/C”)                                                                                                Maximum Validity: 6 months.

Issue documentary sight/usance L/C on back-to-back basis Conditions:

1)Lodgement of original Master L/C issued by acceptable bank in form & substance acceptable to the Bank. Terms and conditions of the master letter of credit must be acceptable to the Bank, must be strictly complied with and not varied or waived without the Bank's prior written consent.

2)   The Bank to retain control over goods / title documents (refer Notes Item (i) mentioned below) under each L/C (refer Notes Item (ii) mentioned below).

3)   Evidence of applicable cargo insurance cover.

4)   5% cash margin (or pledged deposit) for each outstanding of L/C issuing. The Bank reserves the right to ask for top-up of cash margin in case of adverse market condition.

5)   Usance Master L/C within 90 davs tenor.

DBS Bank (Hong Kong) Limited

Enterprise Banking

16 Floor, The Center

99 Quee’s Road Central

Central, Hong Kong

Tel 852 3668 5533

Fax 852 2169 0350

www.dbs.com

Armco & Metawise (H.K.) Limited                                                                                                       &# 160;             Our ref: P/HBHBC/00020/09

Notes:

(i) "control over goods / title documents" means: Any L/C issued by the Bank to call for full set original marine bills of lading "issued to order of the Bank" or "to order + blank endorsed by shipper", Charter party bill of lading is allowed if covered by Master L/C.

(ii) Bill of lading indicating any clause relating to "delivery of goods without surrender of original bill of lading" or similar wordings is not acceptable.

Pricing/ Commission of Trade	Export Bills Collection Commission
Facilities:	1st USD50,000.-	1/8%
	Balance	1/16%
	L/C Opening Commission/ Commission in Lieu of Exchange
	1st USD50,000.-	1/4%
	Balance	1/8%
	Commission in Lieu on Import Bills for Back to Back Deal
	Waive
	Interest
	Export L/C bill transit interest: 2.75% per annum over LIBOR or
	Bank's Cost of Fund on the outstanding amount from drawdown
	until repayment in full, as conclusively calculated by the Bank.
Set Up Fee of Facilities:	USD10,000.-

D. SECURITY AND CONDITIONS PRECEDENT:

Unless otherwise approved by the Bank, the Facilities will be made available or continue to be made available to the Borrower provided that the Bank has received each of the following, in a form and substance satisfactory to the Bank:

1 . This letter duly executed by the Borrower.

2.           General Commercial Agreement duly executed by the Borrower.

3.         (i) All monies Charge on Cash Deposit(s) duly executed by the Borrower in favour of the Bank;

(ii) the pledged deposit or cash margin in a principal amount of not less than 5% of the outstanding of Back to Back L/C Facility at any time, together with all interest accrued thereon. (The Bank has the right to require a margin on top of the amount specified above as pledged deposits)

4.           Letter of Comfort duly executed by China Armco Metals, Inc.

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Armco & Metawise (H.K.) Limited                                                                                                                                 Our ref: P/HBHBC/O0020/09

5.         Guarantee and Indemnity for an unlimited amount duly executed by Yao Kexuan.

6.   Guarantee Agreement ~ to secure all indebtedness owed by the Borrower to the Bank duly executed by Yao Kexuan

7.   Evidence on acceptance of appointment as process agent for Yao Kexuan in respect of service of legal process under the documents to which it is a party.

8.   All documents and/or other requirements for complying with Customer Acceptance Policies or similar requirements imposed by governing authorities and/or the Bank.

9.   Original or Certified copies of all necessary consents, approvals and other authorizations (including but not limited to those required by relevant governing authorities and/or the resolutions of the directors and shareholders of the Borrower and/or any security provider(s) in connection with the execution, delivery, performance and enforcement of this letter and all other documents mentioned above, if applicable.

10. Original or Certified copies of all necessary registrations and filings as may be required by relevant governing authorities in connection with the execution, delivery, performance and enforcement of this letter and all other documents mentioned above, if applicable.

11. Such other documents, items or evidence that the Bank may request from time to time.

E. FACILITY ADJUSTMENT AND TOP-UP REQUIREMENT

The Borrower shall comply with (and procure any security provider to comply with) at all times the security coverage ratio(s) specified in this letter or as may be determined by the Bank from time to time. If any of the security coverage ratio(s) shall at any time fall below the level required by the Bank, the Borrower shall provide additional security acceptable to the Bank and/or reduce the outstanding of the Facilities designated by the Bank, in order to comply with the relevant requirements within the time limit imposed by the Bank from time to time. Without prejudice to the rights of the Bank under this letter, the Bank is authorized, from time to time, to uplift, realize, collect or sell as the Bank may think fit and without being liable for any loss to the Borrower or any security provider, if applicable, all or any part of the securities pledged to the Bank without any prior notice to the Borrower or any security provider, if applicable, and to apply the proceeds in or towards satisfaction of the Borrower's indebtedness owing to the Bank.

F. COVENANTS AND UNDERTAKINGS:

The Borrower undertakes to the Bank that it will:

·   ensure that all consents, licences, approvals, registrations and filings (as appropriate) in connection with the Facilities, guarantee or securities as may be provided in relation to the Facilities granted hereunder are duly obtained, completed and will remain in fun effect throughout the period when there is outstanding under the Facilities .

·   promptly submit to the Bank:

a)   a certified copy of the audited (and, as appropriate, consolidated) financial statements of the Borrower and all corporate security provider(s), if applicable, as soon as they are available, but in any event within 10 months after the end of the financial year end and at any other time requested by the Bank;

ENT/SYS/0426(09/08)

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Armco & Metawise (H.K.) Limited                                                                                                                                 Our ref: P/HBHBC/O0020/09

b)   with reasonable promptness, details of any litigation, arbitration or administrative proceeding current or, to its knowledge, threatened or commenced against it; and  

c)   other information that the Bank may request from time to time .

·   immediately inform the Bank of:

a)   any change of the Borrower's directors or beneficial shareholders (except where the Borrower is a listed company) or amendment to its memorandum or articles of association or equivalent constitutional documents.  

b)   any substantial change to the general nature of the Borrowers existing business.

c)   any factor which may inhibit, impair or delay performance by the Borrower or the security provider(s), if any, of the obligations under any loan and security documents to which they are a party.

d)   the failure to continue to obtain consents, licenses, approvals, registrations and filings (as appropriate) in connection with the granting of the Facilities and/or the provision of securities (including without limitation guarantee(s) in relation to the Facilities granted hereunder throughout the period when there is outstanding under the Facilities.

G. OTHER TERMS AND CONDITIONS

The Facilities are available at the sole discretion of the Bank and are in all respects uncommitted. The Bank may at any time immediately modify, terminate, cancel or suspend the Facilities or any part of it, or otherwise vary the Facilities or any part of it, without the consent of the Borrower or any other person. Unless the changes are not within the Bank's control, the Bank shall give reasonable notice to the Borrower for any variation to the Facilities affecting the interest, fees and charges and the liabilities or obligations of the Borrower, and such variation shall take effect after the expiration of such notice which may be given by the Bank by such means as the Bank may at its discretion see fit.

Notwithstanding any provisions stated in this letter, the Facilities are repayable on demand by the Bank. The Bank has the overriding right at any time to require immediate payment of all principal, interest, fees and other amounts outstanding under this letter or any part thereof and/or to require cash col1ateralisation of all or any sums actually or contingently owing to it under the Facilities.

The "Terms and Conditions Governing Banking Facilities and Services" attached and/or referred to in this letter form an integral part of this letter and the Borrower agrees to observe and be bound by them.

This letter and the Facilities shall be governed by the laws of the Hong Kong Special Administrative Region and the parties hereto hereby submit to the non-exclusive jurisdiction of the Hong Kong Courts.

Please signify your understanding and acceptance of this offer by signing and returning to us the duplicate copy of this letter and provide each of the items under the section headed "Security And Conditions Precedent" above, for the attention of Mr. Alex Wong ("Designated Relationship Manager"), within one month from the date of this letter, otherwise the offer will lapse at the discretion of the Bank.

We enclose a set of documents which should also be completed and returned to us. If you have any queries, please contact the Designated Relationship Manager at telephone number 3668-5555.

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Armco & Metawise (H.K.) Limited                                                                                                                                 Our ref: P/HBHBC/O0020/09

We are pleased to be of service to you

Yours faithfully,

For and on behalf of

DBS Bank (Hong Kong) Limited

/s/ ________________________

Authorized Signature

FN/mh Encl.

We hereby confirm our understanding and acceptance of all the terms and conditions set out in (i) this letter and (ii) the "Terms and Conditions Governing Banking Facilities and Services" attached to this letter and our agreement to be bound by all of them.

Signed for and on behalf of

Armco & Metawise (H.K.) Limited

/s/ Kexuan Yao

Authorized signor(s)

Signature of Witness

/s/__________________________

Name of Witness:

Hong Kong Identification / Passport No:

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Terms and Conditions Governing Banking Facilities and Services

These Terms and Conditions form an integral part of the banking facility letter ("Banking Facility Letter") from DBS Bank (Hong Kong) Limited to the Borrower to which they are attached.

1.      Definitions and Interpretation 1. 1 The terms below used in these Terms and Conditions shall have the corresponding meanings: "Agreement" the Banking Facility Letter together with these Terms and Conditions (including any supplement) and any other terms and conditions and/or agreement referred to In the Banking Facility Letter   "Assets" includes present and future properties, revenues and rights of every description.   "Bank" DBS Bank (Hong Kong) Limited which includes all its branches and offices wherever situated and its successors, assigns and any other person with which the Bank mergers or consolidates. "Banking Facility Letter" the banking facility letter(s) (including all its attachments, schedules, appendices, amendments and supplements issued by the Bank in relation to facilities extended by the Bank to the Borrower, to which these Terms and Conditions are attached. "Bank's Cost of Funds" the cost of funding of the Bank as may be determined by the Bank from l~TT1e lO time "Borrower" the Borrower specified " the Banking Facility letter, and where there is more than one Borrower, all references to the Borrower" shall mean all such persons or anyone or more of them. "Business Day" a day on which commercial banks in Hong Kong and, if applicable, the principal financial center of the relevant currency are open for business (other than a Saturday) "Exchange Rate" the rate for converting one currency into another currency that the Bank determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and billing on the Borrower "Facilities" the banking facilities (or any pan of It/ specified in the Banking Facility Letter and such other facilities, loans, overdrafts, advances, etc. from time to time made available by the Bank. "Fixed Deposit Rate" the deposit interest rate for fixed deposits pledged to the Bank as security for Its corresponding Banking Facility.   "HIBOR" the Hong Kong Interbank Offered Rate quoted by the Bank for the relevant period.    "LIBOR" the London Interbank Offered Rate quoted by the Bank for the relevant period.    "Prime Rate" the rate which the Bank announces or applies from time to time as its prime rates for lending Hong Kong Dollars, or where applicable, for lending United States Dollars.   "Services" any banking services provided by the Bank. 1.2           Unless a contrary ,indication appears, a reference in the Agreement to:   a)a person Includes an individual, a company, sole proprietorship, partnership or body unincorporated and its successors and assigns.   b)any document includes a reference to that document 2S amended, varied, supplemented, replaced or restated from time to time: and c) a provision of law is a reference to that provisions as amended or re-enacted I .3           Unless the context otherwise requires, words importing the singular include the plural and vice versa and the neuter gender includes the other genders. 1 4           Any matter required to be done on a particular date which is not a business day shall be done on the next following business day. 1.5           Headings are for convenience only and are to be Ignored in construing these Terms and Conditions.   2. Application 2.1 These Terms and Conditions shall apply to any Facilities and Services which the Bank in its sole discretion, may agree to make available and provide to such extent and in such manner as the Bank thinks fit. 2.2 These Terms and Conditions shall be subject to such other terms and conditions which may be specified by the Bank from time to time In the Banking Facility Letter, other documents, agreements or applications. 2.3 In the event of any conflict or inconsistency between these Terms and Conditions and the provisions of the Banking Facility Letter, the latter shall prevail. 3.Payments 3.1 Unless otherwise agreed In writing by the Bank, all payments made under the Agreement shall be made in immediately available funds to the Bank before noon on the due date. 3.2 All payments by the Borrower to the Bank shall be made without any set-off, counterclaim, deduction, withholding or condition of any kind, If the Borrower is compelled by law to make any withholding or deduction, the sum payable by the Borrower shall be Increased so that the amount actually received by the Bank is the amount it would have received if there had been no such withholding or deduction. 3.3 Payment by the Borrower to the Bank shall be in the currency of the relevant liability or, If the Bank so agrees in writing, In a different currency, in which case the conversion to that different currency shall be made at the Exchange Rate'. The borrower shall be liable for any shortfall if the converted currency is less than the outstanding liability. 3.4 Any monies paid to the Bank in respect of the Borrower's obligations may be applied in or towards satisfaction of the same or placed to the credit of a suspense account with a view to preserving the Bank's rights to prove for the whole of the Borrower's outstanding obligations. 3.5 If any payments paid to the Bank in respect of the Borrower's obligations are required to be repaid by virtue of any law relating to insolvency, bankruptcy or liquidation or for any other reason the Bank shall be entitled to recover such sums from the Borrower as If such monies had not been paid. 4.Drawings Against Unlearned Amounts In the event the Bank permits the Borrower to draw against funds to be collected or transferred from any account(s), the Borrower shall on demand reimburse the Bank In full the amount so drawn If the Bank does not receive the funds in full at the time the Bank ought to have received the same or if, after the Bank has accepted the transfer, the Bank is prevented from collecting or freely dealing with the funds In accordance with its usual banking practice. 5. Letter of Credit For facility relating to Letters of credit calling for cargo receipt, If so agreed to be granted by the Bank, the beneficiaries and each of the individual limits are .subject to the Bank's approval on a case-by-case basis. The Bank may from time to time carry out at the Borrower's expense updated searches of the said beneficiaries and all related (costs and fees may be debited 10 the borrowers) account. 6. Account Payable Financing Payment under the Facility shall be made directly to the relevant supplier. The suppliers and each of the individual facility limits are subject to the Bank's approval on a case-by-case basis The Bank may from time to time carry out at the Borrower's expense updated searches of the said suppliers and all related costs and fees may be debited to the Borrower's account 7.Negotiation under Documentary Credit If a discrepancy is found in the underlying letter of credit documents, then notwithstanding anything contained in the Agreement, (the Bank may at its absolute discretion refuse to negotiate any such documentary credit and/or bill(s)).   8.Documents against Acceptance Bills Purchased and Documents against Payment Bills purchased with Insurance Cover 8.1 The Bank has or may from time to time take out and do all things as appropriate or necessary to effect and maintain an insurance policy with such reputable insurance company or companies on such terms and in such value to cover such risk(s) related to the Facility as the Bank may deem fit, and the Borrower agrees to reimburse the Bank, without deduction, for all monies expended including but not limited to insurance premium In relation thereon. 8.2 The Borrower is required to comply with all the terms and conditions of such policies as shall from time to time be entered into between the Bank and any insurance company as the Bank may deem fit and the Borrower undertakes and warrants not to do or omit to do or permit or cause or suffer to be done any act, matter or thing whatsoever whereby any such policy of insurance may be rendered void or voidable or whereby any premium may be increased. 8.3 Such arrangement shall not extinguish the Borrower's obligations under the Facility, and the Borrower agrees to render such co-operation and assistance as the Bank may require to connection with any claim or other matter arising in connection with any such insurance policy. 9. Treasury Facilities 9.1 For any foreign exchange, options, futures, swaps or other structured or derivative products, applications will only be considered by the Bank subject to its receipt of the documentation that the Bank may require from time to time. Any treasury related contract will be entered into by the Borrower at the rate(s) quoted by the Bank at its absolute discretion. 9.2. The terms included or referred to in the relevant confirmation issued by the Bank shall apply to all treasury related transactions between the Borrower and the Bank. 9.3 The Borrower warrants that it will enter into any transaction with the Bank solely in reliance upon Its own judgment and at its own risk, and the Bank shall not be responsible for any loss or other consequences suffered or incurred by the Borrower, whether or not acting on advise received from the Bank. 9.4 The treasury related contract amounts shall be subject to the relevant facility limit(s) (if any) stipulated in the Banking Facility letter and the risk exposure limits set (either advised or otherwise) by the Bank from time to lime. 9.5 The Bank may from time to time mark the Borrower's outstanding treasury related contracts to market by reference to the prevailing market rate or quotation in order to calculate the Borrower's gain or loss under the contracts. If the Bank determines that the Borrower has incurred a loss under any such contracts by the then prevailing mark­-to-market calculation, the Borrower shall forthwith pay such sum or deliver such collateral as required by the Bank to cover such loss. 9.6 The Bank has the right to close out and/or terminate any or all outstanding treasury a)   the Borrower fails to perform any terms of the Agreement including its default In payment;   b)the outstanding contracts amounts exceed the facility Iimit(s) (if any) or the Bank's risk exposure limit(s);   c)the Borrower shall become insolvent or suspends payment of any debt when due or subject to any bankruptcy or winding-up petition; or d)any circumstances have arisen or continued which, in the Bank's opinion, might adversely affect the Bank's position under the relevant contracts Upon closing-out or termination of the treasury related (Contracts, the Borrower shall pay to the Bank any loss incurred under those contracts. Such loss shall be determined by the Bank (acting in good faith) based on the replacement market value of the contract, so closed-out or terminated, which determination shall be binding and conclusive on the Borrower. 10,           Application of Proceeds   10.1 The Bank may apply the net proceeds of any sale, disposition or dealing of the security of the Borrower towards discharge of the Borrower's obligations to the Bank In whatever priority that the Bank may determine. 10.2 The Borrower shall, upon demand by the Bank:   a)Provide such further security in form and value as maybe, required in the opinion of the Bank sufficient to secure any of the Borrower's obligations to the Bank; and   b)execute and deliver to the Bank any documents in form and substance satisfactory to the Bank over any of the Borrower's assets as the Bank specifies in any such demand 10.3 Save for negligence or willful default. The Bank shall not be liable for any loss or damages or depreciation in value of any security granted in favour of any Bank due to the Bank's exercise of any of its rights over of any security 11. Interest 11.1 The Bank shall charge interest on any sum(s) outstanding or owing by the Borrower from time to time. Unless otherwise specified, interest will accrue on a daily basis and shall be calculated, compound and payable on such basis and in such manner as the Bank may determine at its absolute discretion. 11.2 Save as otherwise specified, interest will be calculated by reference to the actual number of days elapsed and a 365-day year if the Facility is in HK Dollars, Pounds Sterling, Singapore Dollars or Malaysia Ringgit or a 360-day year if the Facility is in any other approved foreign Currencies 11.3 If the interest rate in respect of any Facility is expressed to be a margin over the Prime Rate, the Bank shall be entitled, in its reasonable discretion, at any time to substitute the Bank's Cost of Funds in place of the Prime Rate in calculating the interest payable under such Facility. If the Interest rate in respect of any Facility’s expressed to be a percentage less than the Prime Rate, the Bank shall be entitled, in its reasonable discretion, at any time to replace such interest rate by the Bank's Cost of Funds as the applicable interest fate in respect of such facility, 11.4 If any amount under the Banking Facility Letter is unpaid on due date or exceeds the permitted facility limit, such overdue or excess sum will be subject to the Bank's then prevailing overdue or over limit interest rate, and may be compounded monthly or at such other intervals as the Bank may determine. The Bank may without prejudice to Its other rights, increase the interest rate on the entire amount outstanding under the Banking Facility letter if any amount becomes overdue.  

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LETTER OF COMFORT

To: DBS Bank. (Hong Kong) Limited

Date 15/5/2009

Letter of Comfort

Dear Sirs,

We hereby acknowledge that DBS Bank. (Hong Kong) Limited (the "Bank") at our request or at its discretion has granted or will from time to time grant credit facilities to our Subsidiary Armco & Metawise (H.K.) Limited (the "Subsidiary").

We confirm that the aforesaid credit facilities are beneficial to our group comprising ourselves and our subsidiaries, and irrevocably undertake that as long as any credit facility is in effect and/or any obligations or liabilities of the Subsidiary to the Bank whether actual or contingent are outstanding:

1.           We shall not and shall not enter into any agreement or arrangement to dispose of, reduce or create any security interest in or grant any option over our shareholding or interest in the Subsidiary without giving one month's prior written notice to the Bank. In the event of any such disposal, reduction or creation of any security interest in or option over our shareholding or interest in the Subsidiary, we will forthwith on demand by the Bank deposit with the Bank by way of security prior to such disposal, reduction or creation, such securities which in the sale judgment of the Bank are satisfactory and sufficient to secure the obligations of the Subsidiary towards the Bank.

2.           We will ensure that the Subsidiary will operate at all times as a going concern. We will further keep and maintain the Subsidiary in a sound financial position which will enable the Subsidiary to meet all its obligations and if necessary we will make funds available to the Subsidiary to discharge its obligations and liabilities to the Bank and undertake not to take or permit any action which could result in the Subsidiary being unable to carry on its business or otherwise defaulting under the credit facilities.

Yours Faithfully

/s/ Kexuan Yao________________________

signed by Kexuan Yao

Director

duly authorized for and on behalf of

ChinaArmco Metals, Inc.

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Guarantee Agreement (Translation)

Yao Kexuan

(Guarantor)

And

Armco & Metawise (H.K.) Limited

(Borrower)

And

DBS (H.K.) Limited

(Lender)

Guarantee Agreement

2009-05-15

This <Guarantee Agreement> (The “Contract”) is signed by the below parties on 2009-05-15:

1.           Guarantor:

Yao Kexuan

Address:

ID Number:

2.           Borrower:

Armco & Metawise (H.K.) Limited

Address:

3.           Lender:

DBS (H.K.) Limited

Address:

Based on:

1. On April 22, 2009, the Lender of this Contract issue to the borrower of this contract <Bank Credit Facilities: Armco & Metawise (H.K.) Limited>, the borrower had, on __________,  accepted and signed agreeing to all terms with in the letter of the Bank Credit Facilities( the above grant letter includes all following addendums, amendments, and changes, the “Grant Letter” ); The Grant Letter states: after the fulfillment of all its terms and conditions, the lender will provide to the borrower a loan or credit facilities of USD 12,000,000.00.

2. According to the Grant Letter and/or the request of the lender, the borrower must obtain Yao Kexuan (the Guarantor of the Contract)’s consent to be responsible for guarantee for the full loan. This requirement is a prerequisite for the Borrower to receive or continue the loan and or credit facilities.

According to the Grant Letter and/or the Lender’s above arrangement and requests, the Guarantor voluntarily provide the guarantee for the borrower; Through the negotiation of all the parties, have come to the conclusion of the below terms for all parties to follow.

1. Guarantee of loan amount

Under this Contract, the loan amount guaranteed by the Guarantor is the full amount owed by the Borrower under the Grant Letter, including principle, interest, penalty interests, penalties, compensation for loss, fees, expenses, related arbitration and court fees, legal fees etc.

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2. Period of Guarantee

The period of Guarantee is in effect as of the date of signing, till two years after the expiration of all the loads under the Grant Letter. During the period of Guarantee, the Lender has the rights to ask the Guarantor to take responsibility of the guarantee.

3. Range of Guarantee

The Guarantor agrees: Once requested by the Lender, immediately repay all remaining loan amounts owned by the Borrower under the Grant Letter, including but not limited to principle, interest, penalty interests, penalties, compensation for loss, fees, expenses, related arbitration and court fees, lawyer’s fees etc.

4. Nature of Guarantee

4.1 Basic nature of this guarantee

Under this contract, the Guarantor carries a non-condition, non-revocable joint and several responsibility.

4.2 Other attached nature of the Guarantee

(1) This Guarantee is a independent guarantee, its validity is not effected or limited by any contract and agreements or nullification agreements relating to the loan.

(2) The right given to the Lender under this Contract is not affected or limited by other contracts or agreements. Under any circumstances, as long as the Borrower does not pay back the loan when due, the Lender has the right to request for the Guarantor to carry out his responsibility to the loan, without having to claim the rights of any other parties( including but not limited to the Borrower, other Guarantor, provider of collateral, etc. )or arbitration or any other action.

(3)This Guarantee is a continuous guarantee, and will be affective in the duration of the guarantee, till the loan is paid in full.

(4) As long as the Guarantor takes responsibility to the Lender for any current, future, existing or potential loans under the Grant Letter, the Guarantor will be responsible for guaranteeing these loans; this responsibility will not be affected by any unforeseen element.

(5) Under this Contract, the guarantee responsibility taken by the Guarantor is unconditional, and will not be excused or lessen due to any of the following reasons:

(a) Any correction, addition, or removal to the terms and conditions of the Grant Letter;

(b) Any relief of time or other conditions or any discounts given to any other party by the Lender;

(c) Any agreements made by the Lender with any other party or the Lender waiving or changing any of his rights to any other party;

(d) Any party’s change in legal position or composition, including stock exchange, bankruptcy, liquidation, merger, takeover, reorganizing, death, incapacitated, or other conditions of other limitations, or the change of any party’s name or business scope;

(e) Any party, for any loan, providing any other guarantee, mortgage, collateral or any other assurance.

(6) If there is more than one Guarantor under this contract, the responsibility each Guarantor carry is individual and jointly, the Lender has the rights to demand the amount of the loan from multiple or one Guarantor.

5. Guarantee of payment of loan

5.1 At the expiration of terms of any of the Borrowers loans, including the advanced expiration due to any legal, statutory circumstances, or terms on agreements or contracts between the Lender and the Borrower, due to any reason if the Borrower is unable to at its due date payback the capital, interest, or any other required payments, within 7 days of receiving the payment notice from the Lender, the Guarantor is to pay back in full the amount on the payment notice in its indicated amount, currency, method, date, location and any other  payment instruction, unconditionally as the primary borrower to the lender.

5.2 Other than if there is any major error, the payment notice issued by the Lender has obsolete rights, and it’s contain has restricting rights to the Guarantor.

6. Rights to claim

6.1 Before all loan amount is paid off, the Guarantor cannot received or exercise any rights to claim, or demand any payment of loan from the Borrower before the Lender.

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6.2 Before the loan is paid in full, the Guarantor cannot, without written consent of the Lender, take the Lender’s place and demand payment of the loan or accept any other party’s other guarantee or assurance. If the Guarantor violates these terms and receives guarantee, such guarantee should be regards as the Guarantor receiving on behalf of the Lender. The Guarantor is to transfer all related documents, collaterals, and terms and conditions to the Lender.

7. Objection rights

The Guarantor under this contract, within the allowance of the law, agrees to forgo all rights to objection.

8. Declaration and Commitment

8.1 The Guarantor declares the followings:

(1) The Guarantor is a legal entity in accordance with all use of the law with full capacity for civil conduct.

(2) The Guarantor signed this Contract voluntarily, and willingly, without the coercion of any party. The Guarantor’s responsibility under this contract is legal, binding, and enforceable according to its terms and conditions.

(3) The Guarantor will obtain and maintain all authorization, approval, records, and registrations applicable and legally required relating to this contract, and comply with all the terms and conditions, and take any other required actions, to ensure the Guarantor has the legal rights to sign this contract and to perform the contractual obligations, and to ensure this contract is legal, valid, binding, can be used as evidence in arbitrations and can be enforced.

(4) From time to time, at the request of the Lender, the Guarantor will sign any documents or contracts or perform any actions and arrangements to ensure the rights of the Lender under this contract.

(5) At the request of the Lender, the Guarantor will pay to the Lender all fees and expenses to the negotiation, drafting, printing, signing, enforcement, or any other action, relating to this contract, including legal fees, and arbitration fees.

(6) At the request of the Lender, the Guarantor will pay to the Lender all fees and expenses relating to stamp-duty, notary fee, registration fee, and any other similar tax and duty relating to this contract, and at the request of the Lender compensate for any liabilities due to the delayed or missing payments of the above tax and duties.

(7) If the Guarantor fails to pay all the items as stated in (5) and (6), at requested by the Lender, the Guarantor should immediately pay to the Lender all related items, and pay to the Lender an interest aroused from the amount from the date of payment due till the date when it is paid in full at a rate the Lender sees fit.

9. Tax

All the items paid by the Guarantor within the limit of this contract, cannot deduct any tax of any nature, and cannot for the reasons of offsetting any allowances, or any other reason deduct or reduce. If any deduction or reduction of the above tax items is required by law, the Guarantor should pay to the Lender an additional sum in the amount and as compensation to the Lender for the difference.

10. Currency

10.1 The Guarantor under this contract shall guarantee to the Lender the currency of the loan specified on the Grant Letter, or any other currency with the written consent of the Lender.

10.2 If the Lender receives, with this contract as the basis, from the Guarantor any sum that is in a currency different from the currency stated in 10.1, the Lender has the rights to convert the received sum into the above discusses currency as soon as its procedural processing time, the Guarantor shall make up the difference in payment amount to the Lender. Under any circumstances, the Guarantor will pay in full to the Lender any fees and expenses resulting from the exchanging of currencies.

10.3 The responsibility under this term is an independent responsibility, in addition to the Guarantor’s responsibilities under this contract. This term may be taken as an independent agreement for the purpose of legal action and enforcement.

11. Certification and Basis

11.1 The certifications and basis for the notice of payment by the Lender, with in its scope of business, in the case the Borrower has not made the loan payments to the Lender, other than if there is major errors, its contents is binding to the Guarantor.

11.2 Any documentation or certifications signed by the Lender’s management, employee, or legal representative, regarding the amount of this loan, other than if there is major errors, its contents are binding to the Guarantor.

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12 Lien and Direct Deduction

Guarantor agrees that when the Borrower has breached the contract, besides all the other rights conferred by law, the Lender is entitled to the lien on the properties owned or controlled by Lender and appointee at any time, no matter it is for property preservation or other purpose. In addition, regardless of the place where the bank accounts were opened or paid, the Lender has the right to withdraw the funds from any account opened by the guarantor (if the account is certificate of deposit, the Lender has the right to withdraw the fund when the deposit matures), to offset the due debts owed by the Borrower to the Lender under this contract.

13 Transfer

13.1 Without written consent by the Lender, the guarantor shall not transfer all or any rights or obligations under this contract to any third party.

13.2 When the Lender follows the legal procedure to transfer all or any rights under the Credit Extension Letter to any third party, the Lender can transfer the corresponding rights under this contract to the transferee without necessity to obtain consent from the guarantor in advance. After the transfer is completed, the guarantor shall continue to take liabilities on guaranties as previously.

14 Waiver of Immunity

The signing and execution of this contract is a pure business activity. The guarantor has not any immunity, and irrevocably agrees to waive any potential immunity that may be applicable in the future.

15 Notice

15.1 The notices or other communications related to the contract shall be in written, via telex, fax, or letters.

15.2 If the recipient is the guarantor and/or Borrower, the notices shall be delivered to the legal or office address or the latest telex or fax number known to the Lender. If the notices are delivered via telex or fax, they shall be regarded as being delivered as soon as they are sent. If the notices are mailed out, under the condition that the address is correct and postage is paid, the notices shall be regarded delivered seven days later, no matter whether the mail is returned eventually. But the notices or communications that are from the guarantor to the Lender take effect only when the Lender has actually received the notices.

16 Rights Reservation

That the Lender delays or fails to, or partially exercise the rights conferred by this contract at any time shall neither be regarded as the action to give up the right nor impact the capability of the Lender to further exercise this or any other rights under this contract. That the Lender does not pursue the liabilities of the guarantee under this contract at any time shall not hinder the Lender from pursuing the related or unrelated liabilities under this contract in the future. The rights conferred by this contract to the Lender do not hinder the obgliee from being entitled to other legal rights.

Clause 17 Clause Severability

Under the circumstance that any clause of this contract is regarded illegal, invalid or inappropriate for compulsory enforcement subject to any law, the legal force of other clauses of this contract remains unimpaired (the aforementioned clause that is illegal, invalid or inappropriate for compulsory enforcement shall no longer be a component of this contract), and the validity, effect, and capability for compulsory enforcement of other  clauses shall not be impaired.

18 Applicable Laws

This contract is subject to the laws of People’s Republic of China.

19 Jurisdiction

19.1 All parties involved in this contract agree that the disputes related to the contract shall be under the non-exclusive jurisdiction of Chinese courts. The complaints filed to Chinese court or the compulsory enforcements requested by the Lender to the guarantor per the terms of the contract are under the jurisdiction of the court where the Lender resides. If the property of the guarantor is located in other places, the Lender has the right to choose the jurisdiction of either court where the Lender resides or the property is located. No matter which jurisdiction the Lender chooses, the guarantor shall give the consent.

19.2 The above clause shall not hinder the Lender from filing complaint or requesting compulsory enforcement to any court that has jurisdiction or pursue in one or multiple jurisdiction areas simultaneously or at different times.

20 Legal Binding

This contract has legal bindings on the guarantor, Lender and their corresponding heirs.

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21 Come into Force

This contract shall come into force upon being signed off by the guarantor, Borrower, and Lender. If government approval and registration are required by Chinese laws and regulations for the contract to take effect, the Guarantor shall follow the legal procedure to apply for approval and registration.

22. Notarization

After the signing of this contract, if deem necessary by the Lender, at the request of the Lender, the Guarantor, and Borrower should act in full cooperation with the Lender to apply for a notarized loan agreement at the Shenzhen city Notarization Facilities. If the Guarantor fails to comply with the terms of the contract after the above procedure, the Lender may, without prior notice to the Guarantor, directly ask the governing court to enforce the contract.

23. Other

23.1 The titles of this terms and conditions is just for the reasons of reference, it does not affect the definition of the terms.

23.2 This Contract is the accessory contract to the Grant Letter, and has the same legal rights as the Grant Letter.

This Contract shall have four copies of the same format; each party will hold one copy. The Lender shall hold the extra copy, for use of notarization.

Guarantor: /s/ Yao Kexuan

Signaure

Borrower: Armco & Metawise (H.K.) Limited)

Stamp and signature: /s/ Yao Kexuan

Lender: DBS Bank (Hong Kong) Limited

Stamp and signature: /s/ ____________________

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Mortgage or Change Details

(Companies Ordinance ss.80 (1), 81(1), 82(1), 91(1), & 91 (5))

Companies Registry

Form M1

Important Notes:

Please read the accompanying notes before completing this form.

Please print in black ink

Company number

0763031

1. Company Name

Armco & Metawise (H.K.) Limited (“the Company”)

2. Instrument Creating or Evidencing the Mortgage or Charge.

*note 10

Description of Instrument

Charge on Cash Deposit(s) to secure Liabilities of the Deposit(s) (“Charge”)

Date of Creation

DD/MM/YYYY

3. Amount Secured

Use Continuation Sheet A is space is insufficient

Please refer to Continuation Sheet A

4. Particulars of Mortgagee or Chargee

*Note 11

Name

DBS Bank (Hong Kong) Limited (“Bank”)

*Note 12

Address

11th Floor, the Center, 99 Queen’s Road Central, Hong Kong

*Note 5

Presentor’s Reference

Name: DBS Bank (Hong Kong) Limited

Code:

Address: 11th Floor the Center

99 Queen’s Road Central

Hong Kong

Tel:

Fax:

E-mail Address:

Reference:

M1 COD (Own) (12/07)

Specification No. 3/2007 (Revision) (Dec. 2007)

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Form M1

Company number

0763031

5. Commission, Discount or Allowance payable to the Subscriber of the Debenture

*Note 13

Amount/ Percentage

N/A

6. Short Particulars of the Property Mortgaged or Charged

Use Continuation Sheet B if space is Insufficient

a. Landed Property

1st property

2nd property

b. Other Types of Property

Please refer to Continuation Sheet B and the Definition in Continuation Sheet A

7. Date of Acquisition of Property

N/A

This Form includes 1 Continuation Sheet(s) A and 1 Continuation Sheet(s) B

Signed: /s/ Kexuan Yao

Name:

*Note 7

Company/Mortgagee/Chargee*

(Director/Secretary/Authorized Representative)

Date:15/05/2009

Delete whichever does not apply

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Form M1   Continuation Sheet A Company number 0763031

Amount Secured (Section 3)

All sums of money and liabilities whether actual or contingent, as at the date of the Charge or in the future owing or incurred to the Bank on any account whatsoever by the Company whether as principal or surety and whether from the Company solely or from the Company jointly with any other person or persons or from any firm in which the Company may be a partner and in whatever style, name or form, and including (without limitation):

(i) the amount of (01) any loans, acceptances or other credits or advances made to or for the accommodation or at the request of the Company, (02) any notes or bills, made, accepted, endorsed, discounted or paid by the Bank, (03) any liability under guarantees, indemnities, foreign exchange contracts (spot, forward or otherwise), documentary or other credits or any other instruments whatsoever assumed or given or entered into by the Bank for or at the request of the Company and (04) any liability under all hire purchase agreements and financial, equipment, motor vehicle and other leases entered into between the Bank and the Company; and

(ii) (01) interest to the date of payment (notwithstanding any demand, judgment, death, dissolution, insolvency or other incapacity of the Company or any other person) at such rates and upon such terms as may from time to time be payable, (02) all commissions, discounts, fees and other charges payable to the Bank and (03) all sums, disbursements and other expenses paid or incurred by the Bank, in relation to the Bank's provision of banking or credit facilities or other financial accommodation (including, without limitation, pursuant to hire purchase agreements and financial, equipment, motor vehicle and other leases) to the Company, the implementation of the provisions of, or exercise of rights under, the Charge or the perfection or enforcement (or attempted perfection or enforcement) of the security or any other guarantees or encumbrances for any indebtedness of the Company to the Bank, including all reasonable lega l costs and all other costs and expenses and any exchange control premiums, penalties or expenditure on a full indemnity basis (collectively "Liabilities").

Definitions: (Applies both for Continuation Sheet A and B)

"Bank" shall include its successors and assigns and any of its branches and persons deriving title under the Bank;

"Deposit" means all deposits, credit balances and monies as at the date of the Charge or in the future deposited by the Company in accounts maintained with or held by the Bank, whether such accounts are opened in the name of the Company individually or jointly with any other person or persons or whether such deposits, credit balances and monies are represented or evidenced by instruments having specifications or dates different from the original instruments representing or evidencing them or held in different accounts, as the same may from time to time be increased or decreased, and including, for the avoidance of doubt, all interest (compounded or otherwise) accrued thereon and other amounts of principal added thereto or otherwise, and the expression "Deposit" shall also include, for the avoidance of doubt, any currency into which s uch sums may from time to time be converted and all renewals and/or replacements of such sum(s);

"dissolution" means, in relation to any person, the supervision, winding-up, liquidation or bankruptcy of that person, and any equivalent or analogous procedure under the law of any jurisdiction and "dissolved" shall be construed accordingly;

"encumbrance" means any mortgage, charge, pledge, lien or other encumbrance, priority or security interest whatsoever over or in any property, assets or rights or interests of whatsoever nature and includes any agreement for any of the same and "encumber" shall be construed accordingly;

"the security" means the Charge and the security constituted by it.

Specification No. 3/2007 (Revision)(Dec. 2007)

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Form M1   Continuation Sheet B Company number 0763031

Short Particulars of the Property Mortgaged or Charged (Section 6)

Description of Property Mortgaged or Charged

(1)           By way of first fixed charge and agreement to charge :

the Deposit and all right, title and interest of the Company whatsoever, present and future, thereto and therein, together with any certificates of deposit or other instruments or securities evidencing title, or otherwise relating, thereto and any account to which the same is credited (Clause 3 of the Charge).

(2)           By way of set-off:

any sum standing to the credit of anyone or more of the accounts of the Company with the Bank (whether current, deposit, loan or of any other nature whatsoever and whether subject to notice or not and whether such sum or sums is/are unmatured deposits and including, without limitation, the account to which the Deposit is credited) wheresoever situate (Clause 5.5 of the Charge).

Notes

By Clauses 4.2 (a) and (b) of the Charge, the Company undertakes and agrees that, during the continuance of the security, the Company shall not:

(i)           Withdraw the Deposit or any part thereof or any other amounts for the time being subject to the Charge

except with the Bank's prior consent;

(ii)           Encumber, assign, transfer or otherwise deal with or grant or suffer to arise any third party rights over

or against the whole or any part of the Deposit or any other amounts for the time being subject to the security, or purport so to do.

EX-10.16 4 cnamexrzb.htm UNCOMMITTED TRADE FINANCE FACILITIES AGREEMENT BETWEEN ARMCO & METAWISE (H.K.) LIMITED AND RZB AUSTRIA FINANCE (HONG KONG) DATED MARCH 25, 2009

PRIVATE AND CONFIDENTIAL

Armco & Metawise (H.K) Limited

Room 1407, China Resources Building, 26 Harbour Road,

Wanchai, Hong Kong

Date: March 25th, 2009

Dear Sirs,

Uncommitted Trade Finance Facilities for United States Dollars Ten Million Only (USD 10,000,000.00)

We, RZB Austria Finance (Hong Kong) Limited (the "Lender") are pleased to set out the terms and conditions upon which we wJlJ consider requests made by the Borrower (as specified below) for the Following facilities (the "Facilities").

1. Borrower(s):

Name:                                                                           Armco & Metawise {H.K} limited

Country of Incorporation:                                                                Hong Kong SAR

Company Registration No.:                                                                           763031

Address:                                                                Room 1407, China Resources Building,

26 Harbour Road,

Wanchai, Hong Kong

2. Type and Amount of the Facilities:

(a)   Total Facilities Amount: USD 10,000,000.00 (United States Dollars Ten Million Only) maximum but in no circumstances shall the outstanding of any type of Facility exceed the respective facility sub-limits set out below.

(b)   Available for:                                                                                                Sub- Limit

(i)   Back-to-Back L/Cs:  Issuance of commercial letters of

credit (the ''L/C'') against the lodging of master L/Cs

acceptable to the lender (the "Master L/C");                                                                                     USD 10, 000,000.00

(ii)           Master L/C Financing against

documents presented under Master

L/C by advancing funds to the Borrower;

USD 10,000,000.00

RIB Austria Finance (Hong Kong) Limited

Tel: (852) 2869 6610      (852) 2730 2112

Fax : (852) 2730 6028

SWIFT: RZBAHKHH                                

New Add: Unit 2106-8, 21/F., Tower  1, Lippo Center, 89 Queensway, Hong Kong

Armco & Metawise / No. 2009032508059000

(iii)           Export L/c Financing against

documents presented under export

L/Cs acceptable to the lender (the

"Export l/C"1 by advancing funds to

the Borrower.                                                                                     USD 10,000,000.00

3.Commission, Charges (excluding out of pocket expense) and Interest:

L/C issuance commission:                                                                           1/8% quarterly, min USD 500.00

L/C financing/Negotiation commission:                                                                                     1/8% flat, min USD 500.00

Commission-in-lieu:                                                                                     1/8% flat, min USD 500.00

Collection commission:                                                                                     1/10% flat, min USD 500.00

Interest Rate:

-L/C Financing/Discounting before acceptance:                                                                                                Cost of funds + 250bp p.a.

-L/C Financing/Discounting after acceptance: Cost of Funds + 200bp p.a. for the L/C issued by Agricultural Bank of China, Bank of China, Industrial & Commercial. Bank of China, China Construction Bank and Bank of Communications; and case by case for the L/C issued by other banks.

Cost of funds shall be determined at the sole discretion by the lender by reference to its funding cost for the relevant interest period and relevant currency in respect of the Facilities under this letter.

Without prejudice to any clauses or any of the lender's rights contained in this letter, the lender may recall the Facilities at anytime at its sole discretion upon the occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidify in the funding market. For the avoidance of doubt, the lender has the sole discretion to decide whether or not such event has occurred. The lender will inform the Borrower upon occurrence of any market disruption.

All other charges of the lender are subject to the lender's Schedule of Charges.

The interest payable on L/C Financing / Discounting shall be calculated in US Dollars ("USD") on the basis of actual days elapsed and 360 days per year and shall be deducted up-front from the proceeds of L/C Financing / Discounting.

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Armco & Metawise / No. 2009032508059000

The Lender reserves the right at anytime to amend the commission and charges and to debit the Borrower's account with interest, charges, fees, insurance premiums, normal lender charges, expenses incurred on the Borrower’s behalf and all monies in connection with the Facilities.

4. Purpose:

To facilitate the Borrower's purchase of iron ore, chrome ore, manganese ore and nickel ore (the "Goods") from suppliers acceptable to the lender (individually or collectively the "Supplier”) by L/C for sales against Master L/C or Export L/C to the final off-takers acceptable to the lender (individually or collectively the “Off-taker").

5. Tenor:

Final maturity of the Facilities is May 31st, 2010.

Notwithstanding the above, the Facilities are repayable on demand and the lender has the overriding right at any time to require immediate payment under the Facilities.

6. Application of Monies:

The Lender may apply any sum received from the Borrower to payor settle any principal, interest, fees or any other amount due under the Facilities in such proportions and order and generally in such manner as the Lender shall determine.

7. Collateral/Security:

(a)           Letter of Pledge;

(b)           Trade Finance Security Assignment;

(c)           Power of Attorney to act and sue on behalf of the Borrower;

(d}           Third Party Charge over Cash Deposits on the accounts held with Raiffeisen

Zentralbank Oesterreich AG Beijing Branch (the “Bank”) from the Borrower in favor of the lender.

(el           Unconditional and irrevocable personal guarantee issued by Mr. Yao

Kexuan (the “Guarantor") in favor of the lender with the Net Worth Statement duly signed by the Guarantor in form and substance acceptable to the Lender.

8. Applications for the facilities:

(a)   Each application made by the Borrower to use any of the Facilities in whole or in part shall be a    utilization request by the Borrower to the lender to extend financing on the terms and conditions set out or referred to in this letter. No commitment by the lender to extend financing shall arise under this letter until any application by the Borrower is accepted by the lender either expressly or by its extending such facilities to the Borrower.

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Armco & Metawise / No. 2009032508059000

(b) Such applications shall be made, where applicable, on the lender's standard forms and supported by such documentation that the lender may require.

(c)   No applications by the Borrower to use any of the Facilities will be accepted by the lender unless  the Borrower complies with the terms and conditions set out or referred to in this letter, the conditions precedent set out in Clause 9  (Conditions Precedent) and such other conditions as the lender may impose from time to time.

(d)   Acceptance by the lender in respect of any application made by the Borrower is subject to the Lender's overriding right of repayment on demand, amending, canceling and/or restructuring any of the Facilities and/or pricing at the Lender's sole discretion.

9. Conditions Precedent:

Granting of the Facilities by the lender is discretionary in nature. Each utilization request by the Borrower is further subiect to Clause 8 (Applications for the Facilities) and the fulfillment of the following conditions precedent:

(a) The Lender shall have received:

(i)           certified true copies of the Borrower's statutory/constitutional documents

(certificate of incorporation, memorandum and articles of association, excerpt from commercial register, etc.);

(ii)           this letter duly executed by the Borrower together with a certified copy of

the board resolution resolving or approving the acceptance of the Facilities and the provision of any collateral/security as required in Clause 7 (Collateral/Security), in form and substance acceptable to the lender;

(iii)           legal opinion from counsel(s) acceptable to the lender, if required;

(iv)           all necessary approvals and registrations, which may be required- in

connection with the Facilities to be granted thereunder, have been obtained from Hong Kong and PRC governmental authorities, including SAFE and any other governmental authorities, in form satisfactory to the Lender.

(b) All security / legal documentation mentioned in Clause 7 (Collateral/Security) duly executed and properly registered if required.

(c) Opening of respective account with the Bank.

(d) A list from the Borrower confirming its existing current account list, bank facilities and respective current outstanding and outstanding corporate guarantees issued for any third party as of the date of the Letter.

(e) Not later than 3 business days prior to the issuance of any L/C, the lender shall have received;

(i)           a duly completed application to issue an L/C in form and substance

acceptable to the lender;

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Armco & Metawise / No. 2009032508059000

(ii)           copy of purchase contract between the Borrower and the Supplier in form

and substance acceptable to the Lender;

(iii) copy of sales contract between the Borrower and the Off-taker in form and substance acceptable to the Lender;

(iv)           marine insurance cover note or policy, in form and substance acceptable to

the Lender, to be endorsed to order of the Lender or to show the Lender as loss payee, and satisfactory evidence for payment of the premium, as and when required;

(v)           pre-signed blank bills of exchange, invoices and pocking lists and any other

necessary documents the Lender may request from time to time;

(vi)           the Master L/C, which is to be advised through and deposited with the Lender

and, if required, confirmed by a bank specified by the Lender;

(f) For Export L/C Financing, the lender shall have received:

(i)           a written request from the Borrower for Export L/C Financing in form and

substance acceptable to the Lender;

(ii)           copy of purchase contract between the Borrower and the Supplier in form

and substance acceptable to the Lender;

(iii)           copy of sales contract between the Borrower and the Off-taker in form and

substance acceptable to the lender;.

(iv)           the Export L/C, which is to be advised through and deposited with the

Lender and, if required, confirmed by a bank stipulated by the Lender.

10. Warranties and Undertakings:

(a) All payments due to be made by the Borrower under this Letter shall be made not later than 11:00 a.m. on the relevant day by effecting payments to the Borrower's account held with the Bank;

(b) The Borrower shall deliver to the Lender such documents of title, which are being financed in connection with the relevant L/C and contain' such endorsement satisfactory to the Lender in all respects. Any bill of lading shall be in full set and made out to the order of the Lender or to order and blank endorsed;

(c) The Lender shall have the sole discretion to accept or reject terms or conditions of any of the L/C  to be issued;

(d) The beneficiary of the L/C shall inform the Lender of full shipping details as well as the Expected Time of Arrival ("ETA”) of the vessel at least seven (7) days before arrival of goods;

(e) The lender shall have the absolute discretion to apply any proceeds arising out of Master L/C Financing, Export L/C Financing and/or sale of the Goods to settle the corresponding import obligations and/or indebtedness owned by the Borrower to the lender when due;

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Armco & Metawise / No. 2009032508059000

(f) All payments in connection with the Facilities shall be routed through the Borrower's account held with the Bank;

(g) Any Master L/C  issued by a bank on behalf of Henan Armco and Metawise Trading Co., limited is not acceptable to the lender;

(h) There does not exist any encumbrances, mortgage, lien, pledge on any of the Borrower's assets, both present and future undisclosed and/ or unacceptable by the lender and the Borrower must not create or permit to exist any mortgage, pledge, lien, charge, assignment, or hypothecation or security interest or any other agreement or arrangement having the effect of conferring security over any of the Borrower's assets without the lender's prior written consent;

(i) The Borrower must procure that all their obligations in relation to the Facilities will at all times rank pari passu in terms of security and support (including third party) with all their other present and future obligations, except for the obligations mandatorily preferred by law applying to companies generally;

(j) The Borrower shall furnish to the lender within 60 days after the end of half year a copy of their interim financial statements and 120 days after the end of each financial year a copy of its annual audited financial statements;

(k) The Borrower shall furnish to the lender such other information concerning the Borrower's business, properties, condition or operations, financial or otherwise, as the lender may from time to time reasonably request;

(l) The Borrower shall promptly inform the lender if there is any material adverse change of its operations or financial position;

(m) The Borrower shall promptly inform the lender if any termination event or event of default has occurred or is likely to occur under any agreement with the lender or other creditors;

(n) Notwithstanding any provisions stated in this letter, the Facilities are repayable on demand by the lender. The lender may at any time by written notice to the Borrower immediately terminate, cancel or suspend the Facilities or otherwise modify the Facilities without the consent of any party. The Borrower shall upon notice pay to the lender immediately available funds with an amount equal to the aggregate of its liabilities (both adual and contingent and whether or not matured) which sum shall be credited forthwith to an escrow account with the Bank to be applied at the lender's sole absolute discretion towards the settlement and discharge of its liabilities and obligations on any account;

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Armco & Metawise / No. 2009032508059000

(o) Notwithstanding any provision in the letter, the lender has absolute discretion to sell the Goods by auction or otherwise, at prevailing market price or invoice value to any buyer without having to seek prior consent or agreement from the Borrower. Any sum of money recovered from the sale of Goods shall be applied at the lender's discretion towards the settlement and discharge of liabilities or obligations of the Borrower on any account. All fees, charges, commissions, and/or expenses incurred in or in connection with the sale of the Goods shall be borne by the Borrower;

(p) If this letter is addressed to more than one Borrower, each Borrower accepting the terms and conditions set out in this Letter is jointly and severally liable with the other Borrowers accepting the same. Each Borrower is liable for all obligations of any other Borrower outstanding under the Letter. The obligations and liabilities of each Borrower shall take effect immediately upon its acceptance of the terms and conditions set out or referred to in this Letter. Each Borrower further agrees that the lender is not required to give any notice or make any reference to the other Borrower(s) in relation to the utilization of the Facilities by any Borrower(s);

(q) If this letter is addressed to the Borrower and its subsidiaries, the Borrower, as a primary debtor, is liable to the Lender for all sums payable or owing under the Facilities (whether incurred by the Borrower or its subsidiaries).

11. Default Interest Rates:

Should any payment due to the Lender under the Facilities be outstanding and remain unpaid, default interest shall be charged at the rate of 3% per annum over and above the interest rate determined pursuant to Clause 3 from due date to date of actual payment.

12. Protection:

The Borrower shall take, at its expense, such actions as the Lender thinks fit to perfect, protect or realize the security granted to the lender under the Facilities, whether by registration with any relevant authority, by the giving of notice to the issuer of any Master L/C, Export L/C or other person or by any other means whatsoever.

13. Review:

Notwithstanding the terms herein and in conformity with normal practice, the Lender reserves the right to modify, reduce or cancel the Facilities or any of the terms and conditions herein or any other documents or security relating hereto at the lender's sole discretion and without prior notice.

14. Costs:

All costs (including break-funding cost), legal costs, charges and out-of-pocket expenses in connection with the preparation and execution of the Facilities, perfection of any security documents required hereunder and the protecting and enforcing the rights of the Lender, will be borne by the Borrower on a full indemnity basis.

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Armco & Metawise / No. 2009032508059000

15. General Agreement for Commercial Business:

The Facilities are also governed by General Business Terms and Conditions, to be executed by the Borrower upon the acceptance of this letter. In case of conflict, terms of this letter shall prevail to the extent of conflict.

16. Utilization:

By accepting the Facilities, the Borrower agrees that the Facilities can be used by the Borrower only. Utilization of the Facilities by the Borrower is subject to the terms and conditions set out in this letter.

17. Assignment:

The Borrower may not assign or transfer any of its rights under this Letter without the prior written consent of the Lender.

The Lender may assign and transfer its rights and obligations under the Facilities or any part thereof and for this purpose may disclose to a potential assignee or transferee such information about the Borrower, the Guarantor, and the Facilities as the lender may absolutely think fit.

18. Governing Law:

This Letter shall be governed by and construed in accordance with the Laws of the Hong Kong SAR.

19. Arbitration:

In the event that the lender chooses to settle any dispute amicably by negotiation, an agreement has to be reached within 30 days after a written notice on the existence of the dispute has been given. Otherwise it shall be referred to and finally settled by arbitration under the Rules of the Hong Kong International Arbitration Centre. The tribunal shall consist of one arbitrator who shall, in the absence of agreement of the parties, be appointed by the Hong Kong International Arbitration Centre. The place of arbitration shall be Hong Kong and the language to be used shall be English. The costs of arbitration, including reasonable attorneys’ fees, shall be borne by the losing party.

20. Notice:

Except as otherwise provided in this Letter, all requests, notices or other communications between the parties, shall be in writing and either delivered personally or by registered post or facsimile, addressed to the other party at the following address or other address as notified by such other party:

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Armco & Metawise / No. 2009032508059000

To the Borrower:                                                      Armco & Metawise (H.K) Limited

Room 1706, Building 1, No 66 Jingsan Road,

Jinshui District, Zhengzhou City, Henan Province,

P.R. China, 450008

Attention:                      Wang Chunxiang

Telephone:                      0371-65862751

Facsimile:                      0371-65861170

To the lender:                                                                RZB Austria Finance (Hong Kong) Limited

Unit 2106-08, 21/F., Tower 1, Lippo Centre,

89 Queensway, Hong Kong

Attention:                      Mr. Edmond Wong / Mr. Johnny Wong

Telephone:                      852 - 28696610

Facsimile:                      852 - 27306028

Notice is effective, if hand delivered, upon delivery, if sent by mail, seven (7) business days after posting, if by facsimile, when sent.

21. General:

The Borrower should kindly confirm its acceptance of all the terms and conditions by signing and affixing the Company's stamp on the duplicate of this letter and returning it to the Lender together with the board resolution within 14 days from the date of this Letter.

This letter when accepted supersedes all previous letters, correspondence, discussions and/or meetings relating to offer and terms and conditions of finance facilities.

Should anyone of the provisions of this Letter be or become invalid, this shall not affect the validity of the other provisions hereof. Any invalid provision is to be replaced by a valid provision which comes as close as legally possible to the invalid one taking into account the economic interest of the parties.

Yours faithfully,

RZB Austria Finance(Hong Kong) Limited

For and on behalf of

RZB Austria Finance(Hong Kong) Limited

/s/__________________________________

(Authorized Signatories and Company Stamp)

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Armco & Metawise / No. 2009032508059000

Accepted and Agreed for a on behalf of

Armco Metawise (H.K) Limited

/s/ Kexuan Yao__________________________________

(Authorized Signatories and Company Stamp)

Acknowledged by the Guarantor:

/s/ Kexuan Yao

Yao Kexuan

EX-10.17 5 cnamexexh.htm LINE OF CREDIT REVIEW APPROVAL NOTICE BETWEEN HENAN ARMCO & METAWISE TRADING CO., LTD. AND GUANGDONG DEVELOPMENT BANK ZHENGZHOU BRANCH DATED OCTOBER 21, 2009.

[Translated from Chinese to English]

Loan Review Committee of Guangdong Development Bank Zhengzhou Branch (2009 International Trading) #003

Line of Credit Review Approval Notice

International Business Department:

The line of credit application from Henan Armco & Metawise Trading Co., Ltd. has been received. After the third group review, the reply is as follows:

1.   (Approved) One-year line of credit for international trading is approved for RMB 50 million, exclusively financing the imports of minerals. The line for import letter of credit is RMB 50 million with percentage of guarantee money not lower than 20%, and the bank has the control of cargo; the line for import bill advance (including bill advances under letter of credit and import collection) shall not be higher than RMB50 million and the term for a single bill advance plus usance letter of credit shall not be longer than 4 months; the applied interest rate shall be subject to the head office of the bank; the bank has the control of cargo. The applicant shall pay to take cargo, and the legal person of the applicant, Mr. Kexuan Yao, shall take joint liabilities for warrandice.  It is requir ed: (1) The letter of credit opened by the applicant shall have the bank as the designated recipient of cargo (except for the shipping document with blank headings); (2) The applicant shall purchased insurance policies for the transportation and storage of the cargo covered by this line of credit, with the bank as the immediate beneficiary; (3) The forwarder qualifications and warehouse safety shall be strictly reviewed and the forwarding procedures and storage status shall be under close watch in order to ensure the bank’s control of cargo and goods safety; (4) The International Business Department shall closely watch the goods categories, recent price fluctuation, and market demand during the opening of letter of credit, and increase percentage of guarantee money if needed to mitigate risk that the bank is exposed to.

2.   (Not applied) the application is rejected.

3.   (Approved) Miscellaneous:   Approval Number: 20090318

4.   (Approved) Chief Leader: Chaofeng Kang

Seal

(Loan Review Committee of Guangdong Development Bank Zhengzhou Branch)

Date: 10-21-2010

Note: The applicant shall complete the procedure as stipulated above and get the Charge-Off Notice from the Loan Management Department of Zhengzhou Branch before it can record the expenditure to the account. If the applicant has not charged off within 90 days from the delivery date of this notice, the line of credit will automatically expire.

EX-10.18 6 cnamexing.htm GENERAL AGREEMENT RELATING TO COMMERCIAL CREDITS BETWEEN ARMCO & METAWISE (HK) LIMITED AND ING BANK N.V., HONG KONG BRANCH DATED DECEMBER 3, 2009

General Agreement Relating To Commercial Credits

To: ING Bank N.V.

Hong Kong Branch

In consideration of your agreeing at our request to open or issue or establish from time to time such commercial or documentary credits (hereinafter referred to as "the Credit") on such terms and conditions as you may think fit, I/we, the undersigned, hereby jointly and severally agree as follows:

1.           I/we hereby authorize you to accept and/or pay for my/our account or accounts all drafts drawn or purporting to be drawn under any of the Credit no matter on whom the same may be drawn and I/we agree to accept and/or pay at maturity all drafts drawn or purporting to be drawn in accordance with the terms of the Credit no matter on whom the same may be drawn.

2.           As to drafts drawn or acceptances accepted under or purporting to be drawn or accepted under the Credit, which are payable in Hong Kong Dollars, I/we agree:-

(a) in the case of each sight draft, to reimburse you at your office, on demand, in legal tender of Hongkong, the amount paid on such drafts, or, if so demanded by you, to pay you at your office in advance in legal tender of Hongkong the amount required to pay such draft; and

(b) in the case of each acceptance, to pay to you at your office, in legal tender of Hongkong, the amount thereof, on demand but in any event not later than the date of maturity.

3.           As to drafts drawn or acceptances accepted under or purporting to be drawn or accepted under the Credit which are payable in currency other than Hong Kong Dollars we agree:

(a) in the case of sight draft to reimburse you at your Hong Kong office on demand, the equivalent of the amount paid, in legal tender of Hong Kong at your rate of exchange prevailing at the time of payment in Hong Kong for cable transfers to the place of payment in the currency in which such draft is drawn, with interest from the date of payment of the instrument, or if so demanded by you, to pay you, at your Hong Kong office in advance, in Hong Kong currency, the equivalent of the amount required to pay the same; and

(b) in the case of each acceptance, to pay you at your Hong Kong office, on demand, the equivalent of the acceptance in the legal tender of Hong Kong at your rate of exchange prevailing at the time of acceptance for demand drafts in the place of payment, if payment is made by us in time to reach the place of payment in the course of the mails not later than the date of maturity, or at your rate of exchange prevailing in Hong Kong for cable transfers at time of transmission to the place of payment in the currency in which the acceptance is payable, if such payment is made at your office on the maturity date. If, for any cause whatsoever, at the time in question you do not quote and/or provide any rate of exchange generally prevailing in Hong Kong for effective cable transfers of the sort abo ve provided for, I/we agree to pay you on demand an amount in Hong Kong Dollars equivalent to the actual cost of settlement of your obligation to the payor of the draft or acceptance or any holder thereof, as the case may be, and however and whenever such settlement may be made by you, including interest on the amount of moneys payable by us from the date of payment of such draft or acceptance to the date of our payment to you at the rate customarily charged by you in like circumstance.

4.           In the event that any Hong Kong dollar drafts are drawn by me/us on you in order to refinance any obligation set forth in the preceding clauses, and such drafts, at your option, are accepted by you I/we agree to pay you on demand, but in any event not later than the maturity date the amount of each such acceptance. Each amount which may become due and payable to you under this Agreement may, in your sole and absolute discretion but without prejudice to your rights and remedies herein and if not otherwise paid, be set off by you against any available funds then held by you for any of my/our accounts of whatsoever nature.

5.           I/we hereby authorize you to debit any and/or all of my/our accounts of whatsoever nature with you with all moneys or any part or parts thereof including stamp duty in transit interest and such other taxes or charges as may be applicable in each and every case for which you may be or become liable to pay under or by virtue of the Credit opened, issued or established pursuant to this Agreement at such time or times as your liability in respect thereof shall be incurred whether or not prior to receipt by you of advice of payment or, in your sole and absolute discretion at any time thereafter and I/we confirm that you shall not be under any duty and/or obligation to give us notice of such debit either before or after the same is/are made by you.

6.           I/we agree to pay you on demand, with respect to the Credit, a commission at such rate as you may in your sole and absolute discretion determine and any and all charges and expenses which may be paid or incurred by you in connection with the Credit, together with interest where chargeable. Interest payable hereunder shall be at the rate customarily charged by you at the time in like circumstances.

7.           As security for all of my/our obligations and liabilities to you, I/we hereby recognize and admit your security interest in and hereby pledge and charge to you all property shipped under or pursuant to or in connection with the Credit or in any way relative thereto or to the drafts drawn thereunder, whether or not released to me/us or to my/our agents on security agreements, and also in and to all shipping documents, warehouse receipts, policies or certificates of insurance and other documents accompanying or relative to drafts drawn under or in connection with the Credit, and in and to the proceeds of each and all of the foregoing, until such time as all the obligations and liabilities of me/us or any of us to you at any time existing under or with reference to the Credi t or this Agreement, or any other obligation or liability to you have been fully paid and discharged; and that all or any or such property and documents, and the proce.eds thereof, coming into your possession or that of any of your correspondents, may be held and disposed of as hereinafter provided. I/We agree to execute such financing statements and other writings as shall be necessary to perfect and maintain your security interest in all the said properties and to pay all costs of filing financing, continuation and termination statements with respect to your security interest hereunder. The receipt by you or any of your correspondents at any time of other security of whatsoever nature, including cash, shall not be deemed a waiver of any of your rights or powers herein recognized.

8.           In the absence of written instructions expressly to the contrary, I/we agree that you or any of your correspondents may receive and accept as "bills of lading" under the Credit, any document issued or purporting to be issued by or on behalf of any carrier, which acknowledges receipt of property for transportation, whatever the other specific provisions of such document(s), and that the date of each such document shall be regarded as the date of shipment of the property mentioned therein. Unless otherwise specifically agreed in writing partial shipments may be made and you may honour the relative drafts, my/our liability to reimburse you for payments made or obligations incurred on such drafts being limited to the amount of the Credit.

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You and any of your correspondents may receive and accept as documents of insurance under the Credit either insurance policies or insurance certificates which need not be for an amount of insurance greater than the amount paid by you under or relative to the Credit. You and any of your correspondents may receive, accept, or pay as complying with the terms of the Credit, any drafts or other documents otherwise in order, which may be signed by, or issued to, the administrator or executor of, or the trustee in bankruptcy or the receiver for the property of the party in whose name it is provided in the Credit that any drafts or other documents should be drawn or issued.

9. (a) If at my/our special request the Credit is issued in transferable from, it is understood and agreed that you are under no duty to determent the proper identity of any one appearing in the draft or documents as transferee, not shall you be charged with responsibility of any nature or character for the validity or correctness of any transfer or successive transfers, and payment by you to any purported transferee as determined by you us hereby authorized and approved, and I/we further agree to hold you harmless and indemnified in full against any liability or claim in connection with or arising out of the foregoing.

(b)                If It is a condition of the Credit that payment may be made upon receipt by you of a cable advising negotiation, I/we hereby agree to reimburse you on demand for the amount indicated in the said cable advice, and further agree to hold you harmless if the documents fail to arrive, or when, as and if documents arrive it should transpire that the terms of the Credit have not been complied with, and that the documents not in order.

10.          I/we agree that in the event of any extension of the maturity ortime for presentation of drafts, acceptances, or documents, or any other modification other terms of the Credit, at the request of me or any of us, with or without notification to the others, or in the event of any increase in the amount of the Credit at my/our request, this Agreement shall be binding upon me/us with regards to the Credit so increased or otherwise modified, to drafts, documents, and property covered thereby, and to any action taken by you or any of your correspondent and/or agents in accordance with such extension, or other modification.

11.          The user of the Credit shall be deemed my/our agents and neither you nor your correspondents and/or agents shall be responsible for any and/or all of the following:

(a)        the use which may be made of the Credit or for any acts or omissions of the users of the Credit;

(b)        the existence of the property purported to be represented by documents;

(c)        any difference in character, quality, quantity, condition, or value of the property and that purporting to be represented by documents;

(d)        the validity, sufficiency, or genuineness of documents, even if such documents should in fact prove to be in any or all respects invalid, fraudulent, or forged;

(e)        particular conditions stipulated in the documents or superimposed thereon;

(f)         the time, place, manner or order in which shipment is made;

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(g)        partial or incomplete shipment, or failure or omission to ship any and all of the property referred to in the Credit;

(h)        the character, adequacy, validity, or genuineness of any insurance, the solvency or responsibility of any insurer, or any other risk connected with insurance;

(i)        any deviation from instruction, delay, default, or fraud by the shipper or anyone else in connection with the property or the shipping thereof;

(j)        the solvency, responsibility, or relationship to the property of any party issuing any documents in connection with the property;

(k)        delay in arrival or failure to arrive of either the property or any of the documents relating thereto;

(l)        delay in giving or failure to give notice of arrival or any other notice;

(m)        any breach of contract between the shippers or vendors and ourselves or any of us;

(n)        failure of any Instrument to bear any reference or adequate reference to the Credit, or failure of documents to accompany any draft at negotiation, or failure of any person to note the amount of any draft on the reverse of the Credit or to surrender or take up the Credit or to send forward documents apart from draft as required by the terms of the Credit, each of which provisions, if contained in the Credit itself, it is agreed may be waived by you;

(o)        errors, omissions, interruptions, or delay in transmissions, or delivery of any message by mail, cable, telegraph wireless or otherwise, whether or not they may be in cipher.

You shall not be responsible for any act, error, neglect, or default, omission, insolvency or failure in the business of any of your correspondent or agent, or for any refusal by you or any of your correspondents and/or agents to pay or honour drafts drawn under the Credit because of any applicable law, decree or edict, legal or illegal, of any governmental agency now or hereafter in force or for any matter beyond your control notwithstanding that you may have taken the initiative to choose your correspondent/agent. The happening of any one or more of the contingencies referred to in the in preceding sub-clause of this clause shall not affect, impair, or prevent, the vesting of any of your rights or powers hereunder, or my/our obligation to make reimbursement. In furtherance and extension and not in limitation of the specific provi sions hereinabove set forth, I/we agree that any action taken by you or by any correspondent of yours under or in connection with the Credit or the relative drafts, documents, or property, if taken in good faith, shall be binding, on me/us and shall not put you or any of your correspondents under any resulting liability to me/us and I/we make like agreements as to any inaction or omission unless in breach of good faith.

12.          If it is a condition of the Credit that the accreditees are authorized to draw clean drafts, you are authorized end instructed to accept and pay drafts without requiring, and without responsibility for, the delivery of shipping documents, ether at the time of acceptance or of payment or thereafter.

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13.          I/we agree to procure promptly any necessary import and export or other licenses for the import, export, or shipping of the property and to comply with all foreign and domestic government regulations in regards to the shipment of the property or the financing thereof and to furnish such certificates in that respect as you may at any time require, to keep the property relating to the Credit covered with insurance at all times against marine and fire risks end any other risk(s) as required by you in insurance companies acceptable and satisfactory to you and you may cause to cover with insurance, whether additional or otherwise, any and/or ell risks at any time at your sole and absolute discretion and at my/our expense any and all of the property without my/our further conse nt even though I/we have caused the merchandise to be insured against the same or similar risks. I/we further agree to assign the insurance policies or certificates to you or to make the loss or adjustment payable to you at your option. It is further understood that you will not be responsible for any act or omission on the part of any insurance company and if any insurance company fails to pay I/we will still be responsible to you for the payment of the Credit. It is further understood that if you or the undersigned or anyone else fail to cause to insure the merchandise and if any loss or damage either partial or total occurs I/we will still be responsible for the payment of the Credit.

14 (a) In the event you deliver to me/us, or to any of us, or to my/our agent at my/our request any of the document of title pledged hereunder prier to having received payment in full of all of my/our liabilities to you, I/we agree to obtain possession of any goods represented by documents within twenty-one days from the date of such delivery or said documents and If I/we should fail to do so, I/we agree to return the said documents or to have them returned by my/our agent to you prior to the expiration of the said twenty-one day period. I/we agree to execute for such documents and the goods represented thereby Identifying and describing such documents and goods, which said receipts shall constitute a part of this Agreement.

(b)          So long as the goods are in my/our possession or under my/our control, I/we acknowledge that you will remain the owner thereof and that such goods are open to inspection at all times by you, or if you think fit to retake possession of them without reference to us. I/we undertake that the goods shall not be hypothecated to any person and should such goods be delivered to purchasers and proceeds received therefor I/we engage to keep the money for you apart from all other money which may be in my/our hands.

15.           I and each of us agree at all time and from time to time, on demand, to deliver, convey, transfer, or assigned to you, as security for any and all of my/our obligations and liabilities, contingent or absolute, due at to become due, which are now or at any time hereafter owing by me or us to you, additional security of a character and value satisfactory to you, or to make such payment as you may require. I and each of us agree that all property belonging to me, or us, in which I or we may have an interest, of any name and nature whatsoever, now or at any time hereafter delivered, conveyed, transferred, assigned, or paid to you, or coming into your possession in any manner whatsoever, whether expressly as security for any of the obligations or liabilities of me or us to you or for safekeeping or otherwise, including any items received for collection or transmission and the proceeds thereof, whether or not such property is in whole or part released to us on security agreement, are hereby charged, pledged and made security for each and all such obligations and liabilities.

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16.           I and each of us agree that upon my/our failure at any time to keep a margin of security with you satisfactory to you. or upon the making by me/us of any assignment for the benefit of creditors, or upon the filling of any voluntary or involuntary petition in bankruptcy/ winding-up by or against me/us, or upon the application for the appointment of a receiver of any of my/our property or upon any act of insolvency of me/us, all of such obligations and liabilities shall become and be immediately due and payable without demand or notice, notwithstanding any credit or time allowed to me or us, or any instrument evidence any such obligations or liabilities or otherwise. I and each of us as to property in which I and each of us may have any Interest, and all of us, as to property in which we, whether jointly or severally, may have any Interest, expressly authorize you in any such event, or upon my/our failure to pay any of ouch obligation or liabilities when it or they shall become or be made due, to sell immediately without demand for payment, without advertisement and without notice to us or any of us, all of which are hereby expressly waived, any and all such property arrived or to arrive at private sale or at public auction or at broker's board or otherwise, at your option, in such parcel or parcels and at such time or times and at such place or places and for such price or prices and upon such terms and conditions as you may deem proper, and to apply the net proceeds of such sale or sales together with any balance of deposits and any sums credited by or due from you to me or us or any of us in general account or otherwise, to the payment of any and all of such obligations or liabilities to you however arising. If any such sale be at broker’s board or at public au ction, you may yourself be a purchaser at such sale, free from any right of redemption which I/we hereby expressly waive and release. O/we undertake to pay you on demand the amount of any deficiency remaining after such sale together with all usual commission, charges and expenses and interest at such prevailing rate or rates as you may from time to time charge your customers for unsecured banking facilities.

17.           The rights and liens which you posses hereunder shall continue unimpaired, and I/we and each of us shall remain obligated in accordance with the terms and provisions hereof, notwithstanding the release or substitution of any properties which may be held as security hereunder at any time, or of any right or interest therein. No delay, extension of time, renewal, compromise, or other indulgence which may occur, shall impair your rights or powers hereunder. You shall not be deemed to have waived any of your rights hereunder unless you or your authorized agent shall have signed such waiver in writing. No such waiver, unless expressly as stated therein, shall be effective as to any transaction which occurs subsequent to the date of such waiver, nor as to any continuance of a breach after such waiver.

18.           Except as otherwise expressly provided in this Agreement or as you and I/we may otherwise expressly agree with regard to, and prior to your Issuance of the Credit, the “Uniform Customs and Practice for Documentary Credits (1998 Revision), international Chamber of Commerce Publication No. 500” (or any modification or amendment thereof for the time being in force) shall be binding on the Credit and shall serve, in the absence of proof expressly to the contrary, as evidence of general banking usage.

19.           Without prejudice and in addition to and without limiting the generality of the foregoing:-

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(a)           All bills and documents of title and the goods thereby represented and insurance policies or certificates in connection with any of the Credit shall be held by you under general lien, and shall additionally and specially be charged and/ or (as the case may be) pledged to you as continuing security for the payment of all advance or banking accommodation whether by loan or overdraft and whether for the retirement of any draft or otherwise and of all my/our liabilities to you in connection herewith;

(b)           I/we agree to assign to you my/our rights as unpaid sellers and to transfer into your control any goods represented by the documents received by you or your correspondents and/or agents under any of the Credit and that until payment by me/us of such moneys due to you the proceeds of the sale of the goods represented by the said documents are to be held as trustee for and be available to you and it received by me/us shall be paid to you forth-with and until so paid shall be held by me/us on your behalf;

(c)           l/we agree that the rights and powers conferred upon you by this agreement are in addition and without prejudice to any other securities which you may now or hereafter hold for my/our account and this Agreement shall continue in force and be applicable to all transactions notwithstanding any change in the status or constitution of either your bank or our company or the individuals composing our firm (as the case may be) or otherwise;

(d)           you may restrict negotiations under any or the Credit to your own offices or to any correspondent of your choice;

(e)           this Agreement shall be without prejudice to such further or other terms and conditions that may be agreed upon in respect of any Individual documentary or commercial credit that you may open or establish at my/our request or Instruction;

(f)           for the purpose of any of the Credit, the date of any bill of lading shall, in your favour, be deemed to be conclusive as of the date of shipment and the absence in any bill of lading of any positive evidence of trans-shipment shall, in your favour, be conclusive that trans-shipment has not taken place;

(g)           that on no account shall any claim be made against you after the draft drawn or acceptance accepted under the Credit has been accepted or paid by me/us.

20.           All the Credits shall be opened entirely at my/our own risk and I/we will honour an drafts presented thereunder and repay you when due with interest: even though the goods should not arrive or be refused landing through any act of war or restriction imposed under or by virtue of any law or regulation or order of any local or foreign government or for any other reason whatsoever. Without prejudice to the generality of the foregoing I/we further agree that It I/we put up margin or cash deposit or securities in foreign currency for your opening or establishing any of the Credit on my/our behalf or for my/our account you will nevertheless be entitled to surrender block or withhold such moneys or securities should you be requested to do so by any local or foreign govern ment without requiring my/our consent, and in such case such moneys or securities will not be used to discharge any of my/our liabilities or indebtness due to you on any account and we shall forthwith pay you all the moneys due to you as if no such deposit or securities has been put up by me/us with you or your correspondents and/or agents.

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21.           The word ''property'' as used herein Includes goods and merchandise, as well as any and all documents relative thereto, also securities, funds, choses in action, and any and all other forms of property, whether real, personal or mixed and any rights or interest therein.

22.           This Agreement shall be binding upon me/us, my/ours heirs, executors, administrators, successors, and assigns and shall inure to the benefit of, and be enforceable by you, your successors, transferees, and assigns. If this Agreement should be terminated or revoked as to me/us by operation of law, I/we will indemnify and save you harmless from any loss which may be incurred by you in acting hereunder prior to the receipt by you or your successors, transferees, or assigns of notice in writing of such termination or revocation. If this agreement is signed by one individual including a corporation/company, the terms “we”, “our”, “us” shall be read throughout as “I”, “my”, “me”, as the case may be, i f this Agreement is signed by two or more parties, it shall be the joint and several agreement obligation and liability of such parties; and in any such case, this Agreement shall not be revoked or impaired as to anyone or more of such parties by the death of any of the others or by the revocation or release of any obligations hereunder of anyone or more of such parties.

23. This Agreement and all rights, obligations, and liabilities arising shall be construed in accordance with the laws of Hong Kong and I/we hereby irrevocably submit to the non-exclusive Jurisdiction of the Hong Kong Courts.

24. In this Agreement, unless the contrary intention appears, words importing the masculine gender shall include females and corporations and vice versa and words in singular shall include plural and vice versa.

Dated 8 Dec 2009

SIGNED BY

in the presence of:-

Armco & Metawise (HK) Ltd.

 *SIGNED BY

Yao Kexuan  /s/ Yao Kexuan

for and on behalf of

Armco & Metawise (HK) Ltd

in the presence of:-

Chu Yi  /s/ Chu Yi

*N.B. If executed by a limited company, an extract of a certified copy of the resolution of the Board of Directors of the company approving the execution of this Agreement (as printed below) must be completed.

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Attachment: Ing Bank Agreement

Borrower	Armco & Metawise (HK) Ltd
Lender:	ING Bank N.V.
Purpose	Iron are, Chrome ore, Manganese ore, and Nickel ore trading
Facility type/ limit	USD15 mio ad hoc BBLC opening against export LC.
BBLC Drawdown Conditions: (Not later than 3 business date prior to the issuance of LC)	a.          A duly completed application to issue an LC in form and substance acceptable to Lender;
	b.          Copy of purchase contract between the Borrower and the Suppler in formand substance acceptable to the Lender;
	c.          Copy of sales contract between the Borrower and the Buyer in form and substance acceptable to the Lender;
	d.          BBLC to call for full set BL "issued to order of the Bank" or " to order and blank endorsed"
	8.          The relevant export LC with terms acceptable to the Bank
Collateral:	1) Personal guarantee from Mr. Yao.
	2) Corporate guarantee from China Armco Metals Inc.
	3) Assignment of relevant sale proceeds under export LC.
	4) 5% cash margin.
Pricing	LC opening comm./ comm. In lieu:
	1/4% on 1st USD50K; 1/16% on balance
	Loan spread @ 250bp over COF
Acceptable master LC opening Chinese bank	China Development Bank
	The Export-Import Bank of China
	Bank of China Ltd
	The Industrial & Commercial Bank of China Ltd
	China Construction Bank Ltd
	Agricultural Bank of China

- 9 -

Bank of Communications Co Ltd

China Merchants Bank

Shanghai Pudong Development Bank Co Ltd

China Citic Bank

Bank of Beijing

China Minsheng Banking Corp Ltd

Industrial Bank Co Ltd

Hua Xia Bank

Bank of Shanghai

China Everbright Bank

Guangdong Development Bank

Shenzhen Ping An Bank

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ING

WHOLESALE BANKING

ING BANK N.V. Hong Kong Branch

GENERAL TERMS AND CONDITIONS

To:           ING Bank N.V., Hong Kong Branch (the "Bank")

1.           Introduction

1.1           The relationship between the Bank and me/us is basically that of debtor and creditor. However, other relationships may arise, such as bailor and bailee when items are held in safe custody, according to the banking services provided by the Bank.

1.2           These terms and conditions form part of the account opening application I/we have signed and apply to all my/our accounts with the Bank.

1.3           In addition, each facility or service may be subject to new or additional terms or supplemented or governed by other specific or general descriptive information concerning matters such as fees and charges, my/our identification requirements, operation of the accounts (for individuals (single or joint) or limited companies), rights of set off, interest rates, deposit accounts, time deposits and other payment services, which may be available upon request from the Bank or publicised or displayed in the Bank's premises, as the Bank considers appropriate.

2.           Facilities and Services

2.1           Subject to prior arrangement, the Bank may provide a range of services, including, without limitation, chequeing, deposit, investment, and other banking facility to me/us.

2.2           Investments may include deposits and investments of any nature including, those in or linked to deposits, securities, funds, unit trusts, bonds, bearer certificate of deposits, money market instruments, foreign exchange, interest rate, commodities, financial futures, commodity index or any other index, indicator, or spot, forward margin, option, swap, netting or derivative arrangements or contracts for differences.

2.3           Deposits may include deposits with the Bank in Hong Kong, or placed by the Bank with the Bank's branch or any of the Bank's subsidiaries, affiliated companies or any subsidiary or affiliated company of the Bank's holding company, in each case, outside Hong Kong.

2.4           Either the Bank or me/us may, upon giving reasonable notice, close any account without assigning any reason therefor. Without prejudice to the above, an account may be closed by the Bank with reasonable prior notice. The Bank may, from time to time, fix the minimum and/or maximum amount or value for any transaction to be conducted by me/us.

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2.5           In addition to the above, the Bank may close any account without giving notice to me/us in exceptional circumstances (including, without limitation, if the Bank believes that the account is being used for criminal activities) and also notwithstanding that the same is in credit.

2.6           In relation to any account closed by the Bank, 'the Bank shall be released from any further obligations to me/us in respect of such account, and may refuse payment of any instrument drawn by me/us and presented after the date such account was closed by the Bank without liability to the Bank. I/We may collect the balance standing to the credit of such account, if any, from the Bank during the Bank's normal business hours; alternatively, at the Bank's option, the balance may be sent by way of a cashier's order, or other payment instruments by post to my/our last known address(es).

3.           The Bank's Role

3.1           My/Our deposits and investments may be located in or outside Hong Kong. Any deposits with or other investment obligations of the Bank's branch or any other branch in any particular jurisdiction will be paid at that branch and are subject to the laws and practices of that jurisdiction (including government acts, regulations and/or orders). Neither the Bank's head office, nor any other branch, subsidiary or affiliate shall be responsible for payment of those deposits and obligations if the relevant branch is prevented from fulfilling its obligations due to restrictions (including force majeure) or events beyond the control of that branch. Restrictions shall not include restrictions on payment directly due to liquidation or i nsolvency of the relevant branch.

3.2           Whenever any deposit or other investment is placed or made by the Bank on my/our behalf, I/we agree that the Bank acts as my/our agent for my/our sole risk and account. For any transaction with or through any broker or counterpart, I/we appreciate that the Bank's agreement with him may expressly provide that as against him the Bank acts as principal or that the Bank's rights and obligations are not transferable. However, such provisions will not affect the Bank's capacity as my/our agent in my/our transaction with the Bank. I/We hereby agree that the relevant transaction with each broker or counterpart will be subject to the rules, terms and conditions as stipulated by him.

3.3           The Bank is a member of the Deposit Protection Scheme established under the Deposit Protection Scheme Ordinance (Cap.581) of the laws of Hong Kong (the "Scheme"). Eligible deposits taken by the Bank are protected by the Scheme up to a limit of HK$100,000 per depositor. We acknowledge that certain financial products offered by the Bank are not protected deposits under the Scheme.

4.           Instructions given by Authorised Signatories

4.1           Instructions to the Bank on the opening, operation and/or closing of any account, including any change in the manner of giving instructions, should be given by electronic means or in writing or signed by me/us or the appropriate authorised signatories appointed under my/our mandate for the operation of the relevant account or any relevant letter of authority.

4.2           Any change of authorised signatories by me/us will only be effective after the Bank has received my/our instruction (together with the relevant specimen signature(s)), accepted the same and sufficient time has elapsed enabling the Bank to fully record and implement the instruction in its records concerning the relevant account(s). Where necessary I/we shall execute such mandates or other documents as the Bank may require.

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The Bank shall be entitled to act upon such authorised signature(s) as are recorded in its records for the time being until it has received from me/us written notification of any change.

4.3           l/We shall inform the Bank immediately if I/we discover that my/our signature or the signature of any authorised signatory has or have been forged upon any bills of exchange, drafts, promissory notes, orders or other instruments for the payment of money signed, made and/or drawn upon the Bank or orders or other documents upon which the Bank is intended to act.

4.4           The Bank shall be free from all claims in respect of any account and the particulars of any transaction with respect to any account where the same is made, processed or paid out as a result of any forgery, lack of authority, negligence and/or otherwise by any person whatsoever.

5.           Receipt of Statement, Advice, Notice, etc.

5.1           Any statement, advice, confirmation, notice, communication, document or other communication given or to be given by the Bank will be validly given if dispatched to my/our address last registered with the Bank and will be deemed to have been received by me/us within a generally acceptable time for that means of communication and, in any event, by no later than 30 days after dispatch.

5.2           l/we shall notify the Bank in writing immediately of any change of address or other information previously provided to the Bank by me/us, and shall deliver to the Bank the relevant documents detailing such changes.

5.3           The Bank may send such documents to my/our address(es) last registered with the Bank. I/We agree that if I/we utilise the Bank's facility or service or if I/we do not terminate any related account within 30 days from receipt or deemed receipt by me/us, I/we will be deemed to have received and accepted the terms of such documents as binding on me/us.

6. Statement, Advice or Confirmation

6.1           A statement of account setting out debits and credits to, and balances of, each account will be issued by the Bank either monthly, or at an interval arranged in advance with, and agreed by, the Bank.

6.2           In addition to the statement of account, an advice or confirmation of any transaction concerning an account may be issued by the Bank within 2 days of that transaction.

6.3           I/We undertake to verify the correctness of each statement, advice or confirmation, and to notify the Bank within 90 days from the receipt thereof of any discrepancies, omissions, inaccuracies or incorrect entries in the account, statement, advice or confirmation as so stated, or in the particulars stated in the statement, advice or confirmation. Failure to give notice of any such error within 90 days of receipt may be considered by the Bank as an acknowledgement by me/us of the correctness of any such statement.

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6.4           The foregoing provisions of this Clause shall be binding on me/us notwithstanding that any statement, advice or confirmation may call for signed acknowledgement and return by me/us which I/we have not so provided.

6.5           The Bank may at its discretion destroy any documents relating to any account after digital archiving the same.

6.6           For all purposes, including any legal proceedings, a certificate by any of the Bank's officers as to the sums and liabilities for the time being due or incurred to the Bank by me/us shall, in the absence of manifest error, be conclusive evidence thereof against me/us.

7.           Cleared Funds

7.1           All withdrawals or investments may only be made by me/us against cleared and sufficient funds in my/our account. Any withdrawal or investment made by me/us, on the assumption that funds will be cleared, will be repaid by me/us ,if not so cleared, and I/we hereby acknowledge that the Bank reserves the right to refuse to make payment against uncleared and/or insufficient funds. All cheques or drafts will be purchased or discounted by the Bank on this basis.

7.2           No overdrafts are allowed unless by prior special arrangement with the Bank, provided that the Bank shall be entitled to pay any bills of exchange, drafts, promissory notes, orders or other instruments for the payment of money notwithstanding that such payment results in any account becoming overdrawn.

7.3           Without prejudice to the above, the Bank may debit any of my/our accounts which is overdrawn without prior special agreement with interest at the rate specified by the Bank for the time being for unauthorised overdrafts.

8.           Foreign Currency

8.1           To transfer any amount to any account or pay for any investment or my/our liabilities, or set off any credit balance in any account against my/our liabilities, denominated in a different currency, the Bank may convert any relevant sum into the appropriate currency at the Bank's applicable exchange rate.

8.2           If funds are sent to or paid in a foreign currency, the funds will be payable to the payee in the relevant foreign currency at the prevailing buying rate of the Bank's correspondent, agent or sub-agent unless the payee has made appropriate prior arrangements, acceptable to the Bank, with the Bank's correspondent, agent or sub-agent for accepting the funds in that foreign currency or other currency upon paying all their charges.

9.           Rights of Set Off and Appropriation

9.1           l/We agree that in addition to any general lien or similar right to which the Bank may be entitled at law, the Bank may, at any time without prior notice, combine or consolidate any or all of my/our accounts (wherever situate and maintained with the Bank for whatever purpose and whether subject to notice or not) with my/our liabilities to the Bank and set off or transfer any sum or sums standing to the credit of any of my/our accounts in or towards satisfaction of my/our liabilities to the Bank, whether such liabilities be primary, collateral, several, joint or in other currencies.

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Further, insofar as my/our liabilities to the Bank are contingent or future, the Bank's liability to me/us to make payment of any sum standing to the credit of any of my/our accounts shall, to the extent necessary to cover such liabilities, be suspended until the occurrence of the contingency or future event.

9.2           The Bank shall be entitled to appropriate payments made by me/us or in my/our favour for the credit of such of my/our account or accounts (including any account on which I am/we are jointly or severally or jointly and severally liable with others) or particular entries therein as the Bank in its absolute discretion thinks fit.

9.3           In respect of a joint account, the Bank shall be entitled to set off any sums standing to the credit of such joint account against the debit balance in other accounts which may be held by one or more holders of such joint account. The Bank shall inform me/us promptly after exercising any such rights of set off or transfer, as the case may be.

10.           Fees and Charges

10.1           All services (except for handling retail cash deposits in Hong Kong dollars) will be charged in accordance with the Bank's prevailing practice from time to time and a schedule of the Bank's fees is available to me/us upon request.

10.2           The Bank may debit any account with the amount of any tax, fee, stamp duty, interest, late payment charge, default interest, charge or expense payable by me/us.

10.3           The Bank may accept rebates, fees and other forms of payment from any subsidiary or affiliated company of the Bank or any third party on any transaction effected for me/us and retain the same for the Bank's benefit.

10.4           The Bank may, at any time and without my/our prior consent:

(a)           change the respective rates, amounts and periods of payment of any fee, interest, periodic minimum repayment amount, late payment charge and default interest payable by me/us; and

(b)           debit any of my/our accounts which is overdrawn without prior special agreement with interest at the rate(s) specified by the Bank for the time being for unauthorised overdrafts. Upon having charged any such sums, the Bank will promptly inform me/us of the nature and amount of such charges. The Bank will give me/us 30 days' notice before any change in fees and charges takes effect unless such changes are not within the reasonable control of the Bank.

10.5           The Bank may at its discretion alter, delete or substitute any of these terms and conditions or add new terms and conditions by giving me/us written notice as follows prior to any such variation taking effect (and such variation shall be deemed to be incorporated herein as of such date):-

(a)           30 days' notice when the variation affects fees and charges and my/our liabilities or obligations: or

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(b)           reasonable notice for all other variations. Such notice shall show the variation to these terms and conditions, the ways in which I/we may indicate refusal and the consequence of such refusal. When any variation involves substantial changes or if the changes are complicated, the Bank may provide a summary of the key features and, if the Bank deems appropriate, a consolidation of the revised terms and conditions. Where I/we refuse to accept the variation(s) and chooses to close the account within a reasonable period, the Bank will repay the annual or periodic fee, if any, on a pro rata basis.

11.           Limitation of Liability and Indemnity

I/We agree that except in the case of the gross negligence or willful misconduct of the Bank (i) the Bank will not be under any liability or responsibility and (ii) I/we will fully indemnify the Bank against any claim, loss, damage, expense and/or liability (including legal costs and costs for hedging, unwinding or similar contracts) incurred by the Bank, in each case, for taking or omitting to take any action in relation to any matter herein including:

(a)           in connection with the preservation, protection or enforcement of the Bank's rights, powers and/or remedies;

(b)           the operation of any account and/or the provision by the Bank of any investment, safekeeping or other services;

(c)           any action or omission (including any negligence or default) of any broker, agent, correspondent, custodian or counterpart involved in any transaction;

(d)           any loss or damage caused by breakdown in or delay or failure of any transmission or communication facilities or external clearing systems; or

(e)           as a result of the Bank acting on any written, verbal, telephone facsimile or e-mail instructions given by any person whom the Bank believes in good faith to be me/us or as having authority to give instructions on my/our behalf, regardless of the prevailing circumstances or the nature of the transaction and notwithstanding any error, misunderstanding, fraud, forgery or lack of clarity in the giving, receipt or contents of such instructions.

12.           Supply and Disclosure of Information

12.1           From time to time, it is necessary for me/us to supply the Bank with data in connection with the opening or continuation of accounts and the establishment or continuation of banking facilities or provision of banking services. It is also the case that data are collected from customers in the ordinary course of the continuation of the banking relationship, for example, when I/we write cheques or deposit money. I/We understand that the Bank may not be able to open or maintain any account or provide any service to me/us if I/we fail to provide any information requested by the Bank.

12.2           The purpose for which my/our data may be used are as follows:-

(a)           the daily operation of the services and credit facilities provided to customers;

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(b)           conducting credit checks;

(c)           assisting other financial institutions to conduct credit checks;

(d)           ensuring ongoing credit worthiness of customers;

(e)           designing financial services or related products for customers' use;

(f)           marketing financial services or related products;

(g)           determining the amount of indebtedness owed to or by customers;

(h)           collection of amounts outstanding from customers and those providing security for customers' obligations;

(i)           meeting the requirements to make disclosure under the requirements of any law binding on the Bank or any of its branches; and

(j)           purposes relating thereto.

Without prejudice to the foregoing, it is acknowledged that the Bank has or may outsource certain operations and processing functions to its head office or other overseas branches of the Bank and I/we accordingly consent to the use of my/our data by such parties for such purpose. I/We further acknowledge that, as a result of the aforementioned outsourcing arrangement, overseas regulatory authorities may have access to my/our data. The Bank will ensure that the recipients of client data will adhere to confidentiality undertakings in order to safeguard the confidentiality and security of my/our data at all times.

12.3           Subject as provided in these terms and conditions, the Bank shall not disclose to third persons without my/our consent (express or implied) the state of any account or any transaction with the Bank or any information relating to me/us acquired through the keeping of any account or otherwise arising during the course of the provision of any service or facility by the Bank to me/us, provided that such disclosure may be made if the Bank is compelled to do so under the provisions of any law or regulation, official directive or court order in Hong Kong or elsewhere or if the circumstances give rise to a public duty of disclosure or the Bank reasonably considers that the protection of the Bank's interests so requires disclosure .

12.4           Without prejudice to the above, I/we hereby authorise the Bank and any person who has obtained my/our personal and/or account information or records from the Bank to disclose such information to:

(a)           any agent, contractor or third party service provider who provides administrative, telecommunications, computer, payment or securities clearing or other services to the Bank in connection with the operation of its business, including, but not limited to (A) debt collection agencies, (B) computer firms to which the processing of personal information is to be, or may be, outsourced and (C) credit reference agencies;

(b)           any other branch of the Bank;

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(c)           any other person under a duty of confidentiality to the Bank including a group company of the Bank which has undertaken to keep such information confidential;

(d)           any financial institution with which the customer has or proposes to have dealings; and

(e)           any actual or proposed assignee of the Bank or participant or sub-participant or transferee of the Bank's rights in respect of the customer.

12.5           I am/We are aware of my/our rights and obligations under the Persona! Data (Privacy) Ordinance and acknowledge and agree that it is necessary for me/us to supply the Bank with personal information ("Data") in connection with the opening and/or continuation of accounts and the establishment and/or continuation of banking facilities or services. I am/We are also aware that I/we:

(a)           have the right to check whether the Bank holds data about me/us and the right of access to such data;

(b)           have the right to require the Bank to correct any data relating to me/us which is inaccurate; and

(c)           have the right to ascertain the Bank's policies and practices in relation to data and to be informed of the kind of personal data held by the Bank.

12.6           The Data will be used for considering my/our request and subject to the Bank agreeing to provide such service, the Data and details and all information relating to transactions or dealings with the Bank will be used in connection with the provision of such service to me/us. The Bank will use, store, disclose, transfer (whether within or outside Hong Kong) and/or exchange the Data, details and information to or with all such persons as the Bank may consider necessary, including without limitation the Bank and/or any of the Bank's branches or subsidiaries (whether within or outside Hong Kong) (the “ING Group") for any and all purposes in connection with such service and/or in connection with matching for whatever purpose (whether or not with a view to taking any adv erse action against me/us) the Data with other personal data concerning me/us in the Bank's possession and/or for the purpose of promoting, improving and furthering the provision of other financial services by the Bank and any other member of the ING Group to me/us generally, and/or any other purposes, and to such persons as may be in accordance with the Bank's general policy on disclosure of personal data as set out in any statements, circulars, notices or other terms and conditions made available by the Bank to me/us from time to time.

12.7           I/We have the right to request access to and correction of any of the Data or to request without charge the Data not to be used for direct marketing purposes. Any request may be made in writing and addressed to the Data Protection Officer, 39/F One International Finance Centre, 1 Harbour View Street, Central, Hong Kong (Facsimile No.281 04412). The Bank will comply with such request (and may charge a reasonable fee for processing and data access request) unless the Bank may be or is required to refuse to do so under the applicable law and regulations.

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13.           Default Interest

Interest will be charged on the daily balance of any amount outstanding from me/us at such intervals or rates and payable at such times as the Bank may specify from time to time. Overdue sums will carry interest at the Bank's customary default rate and shall be compounded according to normal banking practice at the Bank's discretion.

14.           Miscellaneous

14.1           The terms "I", "my", "mine", "me", "us" and "our" when used in these terms and conditions, refer to the customer of the Bank, being holder of the accounts maintained with the Bank and shall include one or more individuals, anyone or more holders of a joint account (and in relation to any such account, the liabilities shall be joint and several), sole proprietorship, partnership, corporation and unincorporated association or body, in each case, as the context may require.

14.2           These terms and conditions shall be binding on me/us and my/our estate, personal representatives, trustee in bankruptcy, receiver, liquidator or other successor. If we are a partnership, these terms and conditions shall apply notwithstanding any change in our membership by death, bankruptcy, retirement, receivership or winding-up or of any partner(s) or the admission of any new partner(s).

14.3           References to the Bank shall include its successors and assigns.

14.4           The singular or plural (and in relation to any such account, my liabilities shall be joint and several) shall each include the other and words imposing a gender shall include every gender unless otherwise indicated.

14.5           Any provision contained herein which is illegal, void, prohibited or unenforceable in any jurisdiction shall be ineffective only to the extent of such illegality, voidness, prohibition or unenforceability without invalidating the remaining provisions hereof, and any such illegality, voidness, prohibition or unenforceability in any jurisdiction shall not invalidate or render illegal, void or unenforceable any such provision in any other jurisdiction.

15.           Facsimile / Telephone / E-mail Instructions

15.1           We have requested and authorised the Bank to use facsimile, telephone and/or e-mail as a medium for giving instructions from me/us to the Bank relating to the mandate(s) or other agreement(s) between me/us and the Bank governing the operation of my/our account(s) or credit or other banking arrangements with the Bank.

15.2           Any telephone I e-mail orders and instructions given or purportedly given by my/our authorised signatories ("Authorised Signatories") pursuant to the account mandate maintained with the Bank from time to time on my/our behalf or any facsimile signed by me/us or my/our Authorised Signatories on my/our behalf shall be deemed to be given with the full authority and approval and shall be a sufficient authority to the Bank and conclusively binding on me/us, irrespective of whether such orders or instructions are subsequently confirmed by writing.

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15.3           The Bank shall be under no responsibility whatsoever to verify the authenticity or otherwise of any orders or instructions given to the Bank in the aforesaid manner. I/We accept full responsibility and liability for all consequences of the acceptance and execution of such orders and instructions. In particular, the Bank shall not be liable for any loss which I/we may suffer if the Bank acts on the telephone / e-mail instructions of a person other than the person authorised hereunder or if the Bank acts on instructions transmitted by facsimile upon which any of the signatures has been forged or is otherwise unauthorised but which the Bank believes, in relation to such person, to be one of those authorised or, in relation to such signatures, genuine or authorised.< /div>

15.4           The use of facsimile, telephone and/or e-mail as a means of communication to the Bank for giving instructions shall be entirely for my/our risk, except in the case of gross negligence or willful misconduct by the Bank. Should there be any indistinctness, ambiguity or other uncertainty in the contents of any such facsimile/telephone and/or e-mail instructions, the Bank shall be entitled to construe and execute such instructions in the manner in which it has been perceived by the Bank. Accordingly, I/we shall not hold the Bank liable for any loss, damages or claim or any other consequences arising from such construction and subsequent execution of instructions.

15.5           Notwithstanding anything herein contained, the Bank is entitled at any time in its sale and absolute discretion and without giving any reason therefor to decline any facsimile/telephone and/or e-mail orders or instructions given by me/us or my/our authorised signatories. I/We shall not hold the Bank liable for any loss, damage or claim or any other consequence arising as a result of the Bank declining the same.

15.6           In consideration of the Bank agreeing to accept and execute the facsimile/telephone and/or e-mail orders and instructions as aforesaid, I/we hereby agrees to indemnify and keep the Bank fully indemnified from and against all actions, proceedings, claims, demands, liabilities, damages, losses, costs or expenses of whatever nature which the Bank and/or its agents or employees may directly or indirectly suffer, incur or sustain by reason of its acting in accordance with the request and authority hereinbefore contained subject to the terms and conditions herein including, without limitation, the terms set out in clauses 15.4 and 15.5 hereof.

15.7           Insofar as no deviation thereof has been agreed upon in this Agreement, it shall be subject to the General Agreement by Customer(s) of which the Client has executed and as amended from time to time.

15.8           The request and authority and the indemnity hereinbefore contained shall remain in full force unless and until notice of revocation thereof in writing duly signed by or on my/our behalf is received by the Bank and the Bank has had a reasonable time to act upon the notice of revocation. Such revocation shall not release me/us from any liability hereunder in respect of any act performed by the Bank in accordance with the terms of this Agreement prior to the expiry of such time.

16.           Law and Jurisdiction

16.1           These terms and conditions are governed by the law in effect from time to time in Hong Kong Special Administrative Region.

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16.2           I/We hereby irrevocably submit to the non-exclusive jurisdiction of the Hong Kong Special Administrative Region courts.

17.           Assignment and Transfer

The Bank may novate, assign and/or transfer in whole or in part its rights and/or obligations under these terms and conditions, any related agreements or any related security documents to other lending institutions or persons or change its fending office without further consent of me/us or other parties.

Dated this 8 day of Dec 2009

For and behalf of Armco & Metawise (H.K.) Limited

Authorized Signature(s)

/s/ Yao Kexuan

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General Agreement By Customer(s)

To: ING Bank N.V.

Hong Kong Branch

In consideration of ING Bank N.V, (hereinafter called “ING BANK", which expression shall include its successors and assigns) agreeing to open or to continue my/our account(s) of whatsoever nature of from time to time making or continuing advances to me/us or negotiating on my/our behalf bills of exchange and/or invoices or other documents representing or relating to goods or opening or establishing at my/our request such documentary or other credits as ING BANK may think fit or providing other banking services and accommodation for me/us or any of us or for such other person, firm or company at my/our request as ING BANK may think fit, I/we hereby agree and undertake with INO BANK as follows:-

Payment

1. (a)            All moneys, obligations and liabilities whether past, present or future, actual or contingent, primary or collateral, joint or several, now or at any time hereafter due, owing or incurred to ING BANK anywhere from or by me/ us in any manner whatsoever in respect of any of the facilities made available by ING BANK for me/us or transactions undertaken by ING BANK for me/us as aforesaid on any account whatsoever (whether alone or jointly with any other person or persons and in whatever style, name or form and whether as principal or surety) including but not limited to the amount of any acceptance or other credits or advances and of any cheques notes or bills from time to time made accepted endorsed discounted or paid and of any liability under guarantees indemnities or other securities whatsoever incurred by ING BANK for or at my/our request shall be repaid by me/us immediately on demand by ING BANK together with interest thereon from date of demand to date of repayment at such rates and upon such terms as ING BANK may from time to time at its sale and absolute discretion determine, commissions, fees and other charges and all expenses (including legal and other costs on a full indemnity basis) however incurred by ING BANK in relation to me/us or anyone or more of my/our accounts or the preparation of or the enforcement of any guarantees or security now or hereafter held by ING BANK for any moneys, obligations or liabilities as aforesaid.

(b)           ING BANK shall cease to be under any further commitment to me/us and all term loans and other moneys obligations and liabilities hereby secured not otherwise so repayable shall become payable on demand and cash cover shall be provided on demand for all contingent liabilities on the occurrence of any of the following events of default, namely:-

(i)           if I/we fail to pay any money from time to time due to ING BANK on the due date or fail to comply with any provisions contained or incorporated in this Agreement or in any facility form or other agreement with ING BANK or if I in any respect considered by ING BANK to be material, any representation or warranty made to ING BANK by me/any one or more of us proves to be incorrect;

(ii)           if any other loan, debt or other obligation in respect of borrowed moneys (including for this purpose liabilities under acceptance credits, discounting, hire purchase, rental or other financial agreements becomes capable of being declared payable prior to its stated maturity by reason of default by me/us or is not paid when due;

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(iii)           if a petition is presented or an order made or a resolution passed for winding up of us I being n limited company or a notice is issued convening a meeting for the purpose of passing any such resolution (save for the purpose of and followed by reconstruction of amalgamation on terms previously approved in writing by ING BANK);

(iv)           if I or anyone or more of us shall die or commit an act of bankruptcy or become of unsound mind or make any general assignment for the benefit of creditors or any bankruptcy petition is filed against me/anyone or more of us;

(v)           if the security for any of my/our liabilities ceases to be in full force and effect or shall become unenforceable or an encumbrancer shall take possession or a Receiver shall be appointed of the whole or any part of my/our undertaking property or assets;

(vi)           if I/we (being a limited company) convene a meeting of or propose or enter into any composition or arrangement with creditors;

(vii)            if any judgment  or order made against me/anyone or more of us is not complied with within seven days or if an execution distress sequestration or other process he levied or enforced upon or sued out against any of my/our property or assets;

(viii)           if I/any one or more of us fail to pay my/our debts as and when they fall due or become or I being a limited company are deemed to be insolvent whether within the meaning of Section 178 of the Companies Ordinance (Cap.:32) or otherwise;

(ix)           if I/we stop payment or cease or threaten to cease to carryon business or any part thereof in the normal course or change the nature or mode of conduct of my/our trading in any respect which ING BANK may consider material;

(x)           if my/our undertaking property or assets or any part thereof from time to time considered by ING BANK to be material is sold disposed of or compulsorily acquired I otherwise than in the normal course of trading or on terms previously approved in writing by ING BANK:

(xi)           if there is any change in the name, constitution and/or composition of the society/firm/partnership carried on by all of us and in the name of which society/firm/partnership an account or accounts of whatsoever nature has/have been opened with ING BANK under and in accordance with the terms and conditions herein provided; and

(xii) if any of the foregoing events occurs in relation to any third party which has guaranteed or provided security for or given an indemnity in respect of any money, obligation or liability hereby secured.

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Interests and Commissions

2.           I/we shall pay commissions, interests, fees and charges at such rates as may from time to time be agreed between ING BANK and me/us (or, in default of agreement, at such rates as may be specified in writing by INO BANK) whose decision shall be final and conclusive and be binding on me/us. Interest at such rate or rates as ING BANK may from time to time charge its customers on similar account or accounts shall be payable on the cleared daily balance of the moneys, obligations and liabilities from time to time due owing or incurred by me/us to INO BANK as aforesaid and charged to my/our account monthly in arrears but without prejudice to the right of INO BANK to require payment of such interest and in the event of such interest not being  punctually paid, interest shall be capitalized and compounded with monthly rates in accordance with the usual practice of ING BANK. Interests commissions and fees will accrue from day to day and will be calculated on the basis of the actual number of days elapsed and a 365 day year or such other period as may be appropriate or customary having regarded to the currency (or currencies) in which the relevant facility (or facilities) are made available. Provided always that ING BANK shall have the right at any time or from time to times to charge interest on all moneys, obligations and liabilities due, owing or incurred by me/us to ING BANK as aforesaid at different rates on different accounts maintained by me/us with ING BANK or on different transactions.

3. General Hypo­thecation

 (a)           All bills of exchange drawn, accepted or endorsed by me/us, all produce and goods, bills of lading, warrants, delivery orders, wharfingers’ or other warehouse keepers certificates or receipts and all documents or title, invoices and like documents (and the produce and goods to which they relate) which are now or may at any time hereafter be (a.) warehoused or stored in the name of ING BANK or its agent or nominee or (b.) received by, deposited or lodged with, transferred to or otherwise held by or pledged to the order or under the control of ING BANK or its agent or nominee (either directly or indirectly whether from or by me/us or anyone or more of us or any other person and whether for safe custody, collection, security or for any specific purpose or genera lly) shall be held by ING BANK as a continuing security for the moneys, obligations and liabilities referred to in clause 1 above.

(b)           I/we hereby undertake to provide ING BANK with funds:-

(i)           to meet on demand all bills negotiated endorsed or advanced against or purchased by ING BANK for me/us or any one or more of us which may be dishonoured on presentation for acceptance or which may not be paid at the due date therefore according to the original tenor and all liability in respect thereof however arising and non-payment of a bill shall be deemed to have taken place if at that date funds have not been placed at the free disposal of ING BANK for the whole sum due;

(ii)           to reimburse ING BANK for all advances made against documents of title which may not have been duly taken up on presentation;

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(iii)           to meet exchange expenses and all interest commission discount and other banker’s charges legal notarial and other costs disbursements and expenses on a full indemnity basis; and

(iv)           to meet all freight warehouse dock transit and other charges the cost of insurance rent and all other costs of and incidental to the produce and goods represented by documents hypothecated to ING BANK hereunder.

(c)           ING BANK is hereby authorized at its absolute discretion without notice to me/us or further consent of any person interested:-

(i)           to insure all produce and goods represented by documents hypothecated to ING BANK hereunder against all insurance risks whether by land sea or air for their full value and recover the full amount from the insurers;

(ii)           to land and store or arrange for the storage of such produce and goods and/or re-ship the same to any other port;

(iii)           to pay all freight warehouse dock transit and other charges the cost of insurance rent and all other costs of and incidental to such produce and goods as ING BANK may from time to time think fit:

(iv)           to pay or retain and charge me/us with such charges for commission as are usual between merchant and correspondent and such interest re-exchange notarial end banking charges as are usually payable in these circumstances;

(v)           to take conditional acceptance of bills of exchange (including acceptances for honour) and/or to extend the due date for payment thereof upon such conditions as ING BANK thinks fit;

(vi)           to accept payment from drawees or acceptors (whether or not the acceptance is conditional before maturity under rebate or discount and on payment to deliver up the relative documents to or to the order of the drawees or acceptors;

(vii)           to accept part payment before maturity and to deliver such proportionate part of the produce and goods held against the same as ING BANK in its absolute discretion thinks fit;

(viii)           to convert into Hong Kong currency by telegraphic remittance or otherwise at the discretion of ING BANK any money received by ING BANK under or by virtue of this agreement and to debit my/our account with all costs charges and lose on exchange thereby incurred; and

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(ix)           to debit my/our account with all payments of freight warehouse dock transit end other charges the cost of insurance rent interest and all other expenses incurred hereunder and with all money chargeable to me/us under this Agreement and with the amount of unaccepted or unpaid bills of exchange or of advances against other documents of title for which I/we or any of us are liable to ING BANK or any deficiency arising after realization but so that ING BANK is under no obligation to do any of the foregoing end is not liable for any loss I/we may sustain as a result of ING BANK's delay or failure so to do.

(d)           ING BANK is hereby authorized to sell, assign, transfer, negotiate or otherwise dispose of all or any produce or goods represented by documents hypothecated to ING BANK hereunder or to which they relate without demand for payment or notice or further consent of any person at such time or times in such manner and for such consideration (whether payable or deliverable immediately or by installments) as ING BANK may in its absolute discretion think fit without being under any responsibility to me/us for the price obtained thereby in any of the following events:-

(i)           on default being made in acceptance on presentation or in payment at maturity of any bill of exchange or of any other sums due hereunder;

(ii)           on any drawee or acceptor of any bill (whether conditionally or absolute)suspending payment becoming bankrupt or insolvent Or taking any steps for composition or arrangement with creditors:

(iii)           if I/we fail to repay on demand any money obligation or liability due owing or incurred to ING BANK by me/us or any one or more of us with all interest commission discount and other banker's charges legal and other coats disbursements and expenses;

(iv)           on payment being made by ING BANK which it is authorized to make under this Agreement;

(v)           if and whenever ING BANK considers it desirable having regard to the then market value of the produce or goods that the same should be sold whether or not i/we shall have then become contingently or otherwise liable to ING BANK;

but so that ING BANK is under no obligation so to sell or otherwise dispose and is not liable for any loss I/we may sustain as a result of its delay or failure so to do.

(e)           I/we further undertake to facilitate any such sale or disposal by executing such documents as may from time to time be necessary or desirable to vest the produce or goods in ING BANK or its transferee or to effect delivery of the same as ING BANK may require and by doing all such acts and things as may from time to time be necessary or expedient. ING BANK is authorized to execute and sign any such document as my/our agent and to do any such act or thing on my/our behalf. I/we declare that the produce and goods are free from any other hypothecation pledge charge or encumbrance of any kind.

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(f)           After deduction of all expenses charges and commissions the net proceeds of the sa1e or other disposition of the produce and goods shall be applied at ING BANK absolute discretion in discharge or reduction of any actual or contingent debt obligation or liability due and owing to ING BANK by me/us or any one or more of us and any surplus shall (subject to the provisions of this Agreement) be at my/our disposa1. Any statement of account rendered to me/us by ING BANK shall be sufficient proof of the sale or other disposal of any produce or goods hereunder and of my/our deficiency resulting therefrom and shall for all purposes be conclusive between me/us and ING BANK.

(g)           I/we hereby undertake that the produce end good. represented by documents hypothecated to ING BANK will be kept insured in their full value against all insurable risks including fire and need and all policies whether effected by ING BANK or not are to be treated as part of ING BANK's security. Should any claim arise under any insurance ING BANK is hereby irrevocably authorized to recover the full amount thereof from the insurers and to give a valid receipt on my/our behalf and to charge the same commission on the proceeds as an a sale of the produce or goods and to apply such proceeds as if the same represented proceeds of sale of any produce or goods sold by ING BANK under the power contained above. I/we hereby undertake to assign to ING BANK all the relevant policies o f insurance for that purpose and to deliver them to ING BANK on demand and in the case of loss or damage to the produce or goods howsoever caused to pay over to ING BANK all sums received by me/us or any of us in respect of such insurance end make up my deficiency which may result in the amount of any moneys due to ING BANK and pending payment I/we shall hold all such sums in trust for ING BANK.

(h)           The holding by ING BANK of any additional guarantees or securities is not to prejudice the rights of ING BANK on any bills in case of dishonour nor shall any recourse or proceedings taken thereon or ING BANK giving time or granting any indulgence or making any arrangement or composition affect ING BANK's title to any security or my/our liability.

(i)           ING BANK shall not be liable for default by any insurer warehouse keeper broker auctioneer agent carrier captain or other officer of any ship or craft or other person employed in the insurance sale disposal storage shipment or carriage of any produce or goods or for any other purpose connected therewith nor for any deficiency in the quality or value of any produce or goods nor for the stoppage or detention thereof by the shipper or any other person whomsoever nor for loss on exchange rates or any loss damage or delay however caused.

4. Share and other Securities

 (a)           All stock, shares, certificates of deposit, bonds, notes and debenture stock certificates and other securities (whether marketable or not) which may from time to time be lodged with or held by ING BANK or transferred to ING BANK or its nominee or registered In the name of ING BANK or its nominee (whether for safe custody, security or for any other purpose) together with any substituted securities and. all dividends or interest thereon paid or payable after the date or this Agreement and all other money or rights accruing thereto or offered by way of redemption bonus option or otherwise (all of which are herein all or included in the expression “Securities”) shall be charged to ING BANK as a continuing security tor the payment and discharge of all the mo neys, obligations and liabilities referred to in clause 1 above but so that ING BANK shall not in any circumstances in incur any liability whatsoever in respect of any calls installments or other payments.

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(b)           l/we shall upon demand deposit with ING BANK and ING BANK shall be entitled to retain (i) all stock and share certificates and documents of title relating to the Securities and (ii) all the relevant instruments of transfers of the Securities duly completed in favour of ING BANK or otherwise as ING BANK may direct and such other documents as ING BANK may from time to time require for perfecting its title to the Securities or for enabling it to vest the same in itself or its nominee or in any purchaser to the intent that ING BANK may at any time thereafter if it shall consider it prudent so to do present them for registration without notice to me/us.

(c)           At any time after ING BANK shall have demanded payment or discharge of any money obligation or liability hereby secured (or if requested by me/any one or more of us):-

(i)           ING BANK and any nominee or ING BANK wheresoevor situate any exercise without further notice in respect or all or any of the Securities all the powers conferred upon mortgagee. By the Law of Property Act 1925 of the United Kingdom as hereby varied or extended as if the provisions thereof were incorporated in extensor in this Agreement (save that the restrictions imposed by Sections 93 and 103 of the said Law of Property Act 1925 shall not apply) and nothing that shall be done by or on behalf of ING BANK shall render it liable to account as a mortgagee in possession for any sums other than actual receipt; and

(ii)           any dividends interest or other payments which may be received or receivab1e by ING BANK  or by a nominee in respect or any of the Securities may be applied by ING BANK as though they were proceeds of sale.

(d)           Until ING BANK shall have made demand as provided in Sub-clause 4(c) above:-

(i)           ING BANK will hold all interest and dividends paid on end received by it in respect or the securities for my/our account and will pay such interest and dividends to me/us upon being called upon to do so by me/any one of us; and

(ii)           ING BANK will exercise all voting and other rights and powers attached to the Securities as I/we may from time to time in writing direct.

(e)           ING BANK and its nominee at the discretion of ING BANK may exercise in my/our name or otherwise at any time whether before or after demand for payment and without any further consent or authority on my/our part in respect of the Securities any voting rights and all powers given to trustees by Sections 11 (4) end 11 (6) of the Trustee Ordinance (Cap.29) in respect of securities or property subject to a trust and any power or rights which may be exercisable by the person in whose name the Securities are registered but such power shall be exercised subject to the provisions or sub-clause 4 (d) above.

(f)            I/we hereby warrant to ING BANK that I/we am/are the beneficial owner of and have a good right to deposit and transfer the securities and the same are fully paid up and are free from any lien charge or encumbrance of any kind.

(g)           I/we hereby undertake to pay all calls or other installments and make all other payments in respect of the Securities and If I/we default in so doing ING BANK may if it thinks fit make such payments an my/our behalf. Any sums so paid by ING BANK shall be repayable by me/us to ING BANK on demand and pending such repayment shall be a charge on the Securities.

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(h)           I/we hereby undertake to maintain the value of the Securities at a sum equal to the moneys, obligations and liabilities from time to time by this Agreement with such margin as  may from time to time he specified in writing by ING BANK and to pay all calls installments or other payments if any) in respect of the Securities as and when the same from time to time become due.

5. Docu­mentary Credits

(a)           All documentary credits opened at my/our request by ING BANK (hereinafter collectively referred to as "the Credits" shall be subject to the Securities Customs and Practice for Documentary Credits (1993 Revision) of the International Chamber of Commerce (or any modification or amendment thereof for the time being In force), the provisions of which sha1l be deemed to be incorporated in this Agreement as if the same were set out in extenso herein.

(b)           Except insofar as ING BANK receives from me/us instructions in writing to the contrary we agree that part shipments may be made under the Credits and ING BANK and/or its agents may honour the relative drafts and if the Credits specify shipments in installments within stated periods and the shipper fails to ship in any designated period, shipments of subsequent instalments may nevertheless be made in their respective designated period and ING BANK and/or its agents may honour the relative drafts.

(c)           I/we agree that in the event of any extension of time for presentation of drafts, acceptances or documents or any other modification of the terms of the Credits at my/our request with or without modification to the others or in the event of any increase in the amount of the Credits at my/our request, this Agreement shall he binding upon me/us with regard to the Credits so increased or otherwise modified, with regard to drafts, documents and property covered thereby and with regard to any action taken by ING BANK and/or its agents in accordance with such extensions, increase or other modifications..

(d)           The beneficiaries of the Credits sha1l be deemed to be my/our agents and I/we assume all risks of their acts or omissions. Neither ING BANK nor its agents shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of the goods or property (hereinafter collectively referred to "the property") the subject of the Credits purporting to he represented by the relative documents for any difference in character, quality, quantity, condition or value of the property from that expressed in such documents, for the validity, sufficiency or genuineness of documents even if such documents .should in fact prove to be in any or all parts invalid, insufficient, fraudulent or forged for the time, place or manner in which shipment is made fo r partial or incomplete shipment or failure or omission to ship any or all of the property, for the character, adequacy, validity or genuineness or any insurance for the solvency or responsibility of any insurer, or for any other risk connected with insurance, for any deviation from instructions, delay, default or fraud by the shipper or anyone else in connection with the property or the shipping thereof, for the solvency, responsibility or relationship to the property of any party issuing any documents in connection with the property, for delay in arrival or failure to arrive of either the property or any of the documents relating thereto, for delay in arrival or failure to give notice of arrival or any other notice for any breach of contract between the shippers or vendors and me/us, for failure of any draft to bear any reference or adequate reference to the relevant Credits or failure of documents to accompany any draft at negotiation or failure of any person to send forward documents apart from drafts as required by the terms or the Credits each of which provisions if contained in the Credits itself may be waived by ING BANK,

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or for errors, omissions, interruptions or delays in transmission or delivery of any messages by mail, cable, telegraph, wireless or otherwise nor shall ING BANK be responsible for any error, neglect or default of any of its agents and none of the above shall affect or prevent the vesting of any of ING BANK's rights or powers hereunder. I/we further agree that any action taken by or omitted to be taken by ING BANK or by any of its agents and/or in connection with the Credits or the relative drafts, documents or the property shall be binding on me/us and shall not put ING BANK or any of its agents under any resulting liability to me/us.

(e)           I/we agree to procure promptly any necessary import and export or other licenses for the import or export of shipping of the property and to comply with all foreign and domestic governmental regulations in regard to the shipment of the property or the licensing thereof and to furnish such certificates in that respect as ING BANK may at any time require.

(f)           Without prejudice to the provisions of sub-clauses 5(i) and 6(a) below, if at my/our request ING BANK or any of its agents or correspondents countersigns or issues any guarantee or indemnity covering discrepancies between the documents actually presented under the terms of the Credits and the relative terms or such Credits I/we hereby unconditionally and irrevocably agree:-

(i)           to pay to ING BANK forthwith on demand all moneys and liabilities whatsoever which may be claimed or demanded from ING BANK and/or its agents and/or its correspondents or which ING BANK and/or its agents and/or its correspondents may be called to pay or shall pay or incur by reason of having countersigned or issued such guarantee or indemnity; and

(ii)           to indemnify and keep ING BANK fully indemnified from and against all actions, claims, demands, liabilities, damages, losses, costs and expenses of whatever nature that may be incurred, suffered, sustained or paid by ING BANK and/or its agents and/or its correspondents in connection with or arising out of such guarantee or indemnity or by reason of ING BANK having negotiated bill(s) notwithstanding the discrepancies in the documents.

(g)           If ING BANK makes any payment at my/our request in negotiating or purchasing from me/any one or more of us or any other person any document or draft in respect of a letter of credit or an authority to pay and discrepancies exist between any document or draft presented to ING BANK and the terms of the applicable letter of credit or authority to pay I/we agree to refund to ING BANK on demand, irrespectively of when such discrepancies are discovered, all moneys paid by ING BANK in respect of such document or draft and, without prejudice to the provisions of clause 5(i) and 6(a) below, I/we shall indemnify and hold ING BANK fully indemnified from and against all actions, claims, demands, liabilities losses, damages, costs and expenses or whatever nature which may result or w hich ING BANK may suffer incur or sustain in connection with or arising out of ING BANK’s action in making such payment as aforesaid. I/we further agree that ING BANK shall not be liable for any loss damage expense or delay howsoever caused, whether or not due to the negligence or default of ING BANK or its officers or correspondents, in repeat of any negotiation or purchase of documents or drafts as aforesaid including in particular, but without limiting the generality of the foregoing, any loss resulting from payment of a bill or draft being effected in a currency other than that in which it is drawn by reason of exchange control restrictions or other direction of a governmental or other authority or suspension of or interference with the means to effect transmission of the relevant payment.

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If ING BANK or its agent or correspondent considers in its discretion that it would be inadvisable to deliver up the shipping or other documents upon acceptance of any bill of exchange or draft. drawn or endorsed by me/ anyone or more of us, INO BANK and its agent and correspondent are hereby authorized to deliver up such documents as aforesaid only upon payment of the relevant bill of exchange or draft notwithstanding that such procedure may be contrary to me/our previous instructions.

(i)           Without prejudice to the provision sub-clause 5(f) above and sub clause 6(s) below, if ING BANK countersigns letters of guarantee or letters of indemnity covering the release of goods without production to the shipping companies and/or their agents and/or forwarding agents of the relevant bill of lading or other documents of title, I/we shall indemnity and hold ING BANK harmless from and against any and all consequence which may arise or result therefrom. I/we further undertake that we shall use my/our best endeavors to obtain the bills of lading and/or other documents of title to the said goods or produce and that upon their receipt I/we shall procure the absolute and unconditional release of ING BANK from the guarantee or indemnity and return the relevant documents to ING BANK for cancellation, I/we further authorize ING BANK to endorse In my/our name(s) all relative bills of lading so that such bills of lading may be delivered direct by ING BANK to the shipping companies and /or their agents and/or forwarding agents aforesaid and in order to give effect to this, in the case of shipments under letters of credit, I/we undertake to disregard all discrepancies (if any) between the shipping documents received and those called for by the relative letter of credit and to accept all such shipping documents as if they were all the documents end the only documents called for by the relative letter(s) of credit.

(j)           Where ING BANK makes any collection on any of my/our document or documents and drafts upon .my/our request, I/we agree that if credit has been given by ING BANK for any such document or documents and drafts such credit is conditional and is subject to collection and receipt by ING BANK of full payment of such document or documents and drafts and in the absence of such collection and receipt by ING BANK. I/we agree, upon ING BANK's demand to reimburse ING BANK for the amount so advanced. I/we further agree that in receiving any items for deposit or collection INO BANK assumes no responsibility beyond the exercise of due care. All items which are credited are so credited subject to actual payment in cash and ING BANK will not be liable in any way whatsoever for the fault o r negligible of its duly selected correspondents for any losses in transit and each such correspondent shall not be liable except for its own negligence. ING BANK and any of its agents may accept a draft or credit as conditional payment In lieu of cash settlement of any obligation but my/our obligation to ING BANK will not be discharged until ING BANK has duly received payment on such draft or credit.

(k) Except as otherwise specifically provided, collections are subject to the Uniform Rules for Collections (1995 Revision) or the International Chamber of Commerce (or any modification or amendment thereof for the time being in force).

6. Counter – Indemnity

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(a)           I/we hereby unconditionally and irrevocably agree to counter-indemnity and keep ING BANK fully indemnified from and against all action claims demand liabilities losses damages costs and expenses of whatsoever nature which may result or which ING BANK may suffer incur or sustain in connection with or arising in any way whatsoever as a consequence of ING BANK at my/our request or on my/our behalf giving any guarantee or Indemnity or opening any documentary or other credit or otherwise incurring or assuming any obligation (hereinafter collectively referred to as "the Guarantees") and to pay to ING BANK forthwith all moneys and liabilities whatsoever which may from time to time be claimed or demanded from ING BANK or which ING BANK shall pay or become liable to pay or suffer or incur under or by reason of or in connection with the Guarantees,

(b)           I/we hereby irrevocably authorize ING BANK without making prior demand to debit my account/the account of anyone or more of us with any moneys from time to time payable hereunder- and in the event of a debit balance resulting to charge interest thereon to date of repayment (notwithstanding any demand or any judgment obtained by the Bank or any other matter whatsoever at such rate as may from time to time be payable on such account in accordance with clause 2 above.

(c)           I/we hereby irrevocably authorize ING BANK to pay immediately any amounts demanded from ING BANK or which ING BANK from time to time becomes liable to pay under or by reason of the Guarantees without any reference to or further authority from me/us and without being under any duty to enquire whether any claims or demands on ING BANK are properly made notwithstanding that I/any of us may dispute the validity of any such claim, or demand and I/we shall accept any claim or demand on ING BANK as conclusive evidence that ING BANK was liable to pay and any payment which ING BANK makes purporting to be in accordance with the Guarantees are binding upon me/us.

(d)           I/we agree that any step taken by ING BANK in good faith under or in connection with the Guarantees shall be binding on me/us and shall not place ING BANK under any liability to me/us.

(e)           I/we further agree that ING BANK may at any time without prior reference to me/us determine the Guarantees or any of them or reduce the liability of ING BANK thereunder.

(f)           This counter indemnity shall not be in any way discharged or diminished nor shall the liability of me/any of us be affected by reason or any other indemnity assurance guarantee lien bill note mortgage security payment or other rights being or becoming wholly or in part invalid defective or unenforceable or otherwise failing to be perfected or enforced or being avoided on any ground whatsoever or by reason of ING BANK from time to time without the knowledge or consent of me/us varying releasing or releasing any of the same or granting any time indulgence or concession or compounding with any person or concurring in accepting or varying any compromise arrangement or settlement or omitting to claim or enforce payment or determining varying reducing or extending the terms of the Guarantees or any of them or by anything done or omitted which but for this provision might operate to exonerate me/us.

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(g)           I/we waive all rights of subrogation and agree not to claim any set-off or counter claim against any other person liable or to claim or prove in competition with ING BANK in the event of the insolvency of any such person or to have the benefit of or share in any indemnity guarantee or security now or hereafter held by ING BANK until ING BANK has been fully indemnified against all matters referred to sub-clause 6(a) above. Any security now or hereafter by or for me/any one or more of us which extends to any liability hereunder and all moneys at any time received in respect thereof shall be held in trust for ING BANK as security for my/our obligations hereunder. Money received by virtue or this counter -indemnity may be placed to the credit of a non-interest bearing suspen se account with a view to preserving ING BANK's rights to prove for the whole of its claim against any other person liable.

7. Set-Off

ING BANK may at any time without notice notwithstanding any settlement of account or other matter whatsoever combine or consolidate all or any of my/our then existing accounts (whether current deposit loan or of any other nature whatsoever and whether Subject to notice or not) and set-off or transfer any sum standing to the credit of anyone or more of such accounts wheresoever situated in or towards satisfaction of any of my/our liabilities to ING BANK on any other account or in any other respect whatsoever whether such liability be past, present or future actual or contingent primary or collateral and several or join. Where such combination set-off or transfer requires the conversion of one currency into another such conversion shall be calculated at the spot rate of exchange (as conclusively determined by ING BANK) at the time of the co mbination set-off or transfer.

8. Currency Indemnification

(a)           If for the purpose of obtaining judgment in any court in any country it becomes necessary under the law of such country to convert into a currency (hereinafter referred to as the “Judgment Currency") other than Hang Kong dollars or other currency in which my/our obligations under this Agreement are expressed to be payable (hereinafter referred to as the "Agreed Currency") an amount due in the Agreed Currency under or pursuant to this Agreement then the conversion shall be made, in the sole and absolute discretion of ING BANK, at the rate of exchange prevailing either on the data or default or an the day before the day on which judgment is given.

(b)           If there is a change in the rate of exchange prevailing between the date as of which conversion is made for the purpose of any ouch judgment and the data of payment of the amount due I/we will pay such additional amounts as may be necessary to ensure that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of payment will produce the amount then due under this Agreement in the Agreed Currency.

(c)           My amount due from me/us under this Clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Agreement.

(d)           The term "rate of exchange" in this Clause 8 means the spot rate at which ING BANK in accordance with its normal practice is able on the relevant date to purchase the Agreed Currency with the Judgment Currency and includes any premium and costs of exchange payable in connection with such purchase.

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9. Continuing Security

(a)           The security constituted by this Agreement shall be a continuing security in respect of all moneys, obligations and liabilities whether past, present or future, actual or contingent, primary or collateral, joint or several now or at any time hereafter due, owing or incurred to ING BANK and shall not cease to be in force by reason that I/we may not be indebted to ING BANK at some time or times after its execution and notwithstanding any settlement of account or other matter whatsoever and is in addition to and shall not merge or otherwise prejudice or affect the security created by any deposit of document or any guarantee 1ien pledge bill note mortgage or other security now or hereafter held by ING BANK or any right or remedy of ING BANK in respect of the same and shall n ot be in any way prejudiced or affected thereby or by the invalidity thereof or by ING BANK now or hereafter dealing with exchanging releasing modifying or abstaining from perfecting or enforcing any of the same or any rights which it may now or hereafter have or giving time for payment or indulgence or compounding with any other person liable. Any change in the constitution of ING BANK or the authorized signatories to this agreement shall neither affect the validity of nor discharge this agreement.

(b)           All moneys received by ING BANK from me/any one or more of us or any other person may be applied by ING BANK to such account or liability of mine/ours as ING BANK in its absolute discretion may from time to time conclusively determine.

10. Execution of documents, power of attorney

(a)           I/we shall if end whenever so required by ING BANK execute such further legal or other mortgages charges or assignments as ING BANK shall require over all or any of the Securities (including any substituted securities and any vendor’s lien) and/or any produce or goods hypothecated to ING BANK pursuant to this Agreement and any other transfers or documents ING BANK may from time to time require for perfecting its title to the same or for vesting or enabling it to vast the same in itself or its nominee or in any purchaser to secure all moneys obligations and liabilities hereby covenanted to be paid or otherwise hereby secured such further mortgage charges or assignments to be prepared by or on behalf of ING BANK at my/our cost and to contain an immediate power of sal e without notice and such other provisions for the benefit of ING BANK as ING BANK may reasonably require.

(b)           I/We by way of security hereby irrevocably appoint ING BANK and the persona deriving title under it jointly and also severally to be my/our Attorney to insert the name of ING BANK or its nominees or of any purchaser or to make any other alteration or addition in any transfers or other documents which ING BANK may require for perfecting its title to or for vesting the Securities or any documents aforesaid relating to any produce and goods from time to lime hypothecated to ING BANK pursuant to this Agreement in ING BANK or its nominee or in any purchaser and to make any alteration or addition to the Securities comprised therein or any such documents aforesaid or any other alteration or addition thereto and to re-delivered the same thereafter and otherwise generally for it and in its name and an its beha1f and as its act and deed or otherwise to execute seal and deliver and otherwise perfect or do any such transfer of or other documents and any legal or other mortgage charge or assignment over the Securities or any such documents aforesaid required by ING BANK and all such deeds assurances agreements instruments acts and things which may be required for the full exercise of all or any of the powers hereby conferred or which may be deemed proper on or in connection with any sale or disposition of any of the Securities or of any of the produce and goods represented by the documents aforesaid by ING BANK or its nominees or any of the purposes aforesaid and the appointment shall operate as a general power of attorney made under the Powers of Attorney Ordinance

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(Cap.8I). I/We hereby ratify and confirm and agree to ratify and confirm any instrument act or thing which any such attorney may execute or do.

(c)           ING BANK shall have the right to require me/us to transfer all or any of the Securities or all or any or the other documents from time to time held by or indorsed to ING BANK hereunder to such nominees or agents wheresoever’s situated as ING BANK may select and to hold all or any or such Securities or other documents aforesaid in any branch of ING BANK or with any correspondents or other agents whether in Hong Kong or overseas and all the Securities and other such documents shall be held at my/our expanse risk and responsibility.

11. Waivers Remedies

(a)           Any waiver by ING BANK of any event of default or any breech of any of the warranties covenants terms or conditions contained heroin or other relaxation or indulgence wanted at any time by ING BANK to me/any one or more of us shall without any express reservation to that affect by ING BANK be deemed to be without prejudice to and shall not affect the exercise at any time thereafter by ING BANK of all or any of its rights and remedies hereunder as though no such waiver had been mode or relaxation or indulgence granted.

(b)           No failure or delay on the part of ING BANK to exercise any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by ING BANK of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies provided herein are cumulative and are not exclusive of any remedies provided by law.

12. Non Responsibility

(a)           ING BANK shall not be responsible for any loss or damage or depreciation or diminution in value of any of the goods and produce from time to time hypothecated to ING BANK hereunder or of any of the Securities or any other document from time to time lodged with ING BANK or its agent or nominee (whether for safe custody security or otherwise).

(b)           If owing to exchange control restrictions or other circumstances beyond the control of NG BANK the payment of a bill or other instrument on my/our account is effected in a currency other than that in which it is drawn or expressed to be payable ING BANK shall not be responsible for any foreign exchange loss which arises as a result thereof.

13. Information

I/We undertake to deliver to ING BANK such financial or other information concerning my/our affairs, audited by auditors satisfactory to ING BANK as ING BANK may from time to time reasonably require and in particular but without limiting the generality of the foregoing, I/we undertake to notify ING BANK forthwith of any change in the character, extent or nature of my/our business.

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14.           Joint and Several Liability

Where there is more than one of the undersigned the obligation and undertakings herein contained are joint and several and shall be construed accordingly and none of the undersigned shall be entitled to any of the rights or remedies legal or equitable of a surety as regards the liabilities of the others of them. Each of the undersigned agrees and consents to be bound by this Agreement notwithstanding that any others who were intended to sign or to be bound by these presents may not do so or be effectually bound hereby and notwithstanding that this Agreement may be invalid or unenforceable against anyone or more of the undersigned whether or not the deficiency is known to ING BANK. ING BANK shall be at liberty to release compound with or otherwise vary or agree to vary the liability of, or to grant time or indulgence to, or make other arra ngements with, anyone or more of the undersigned without prejudicing or affecting its rights and remedies against the other or others. Where this Agreement is signed on behalf of a firm, all agreements undertakings and liabilities shall be binding both on the present partners and on the persons from time to time carrying on business in the name of such firm or under the name in which the business of such firm may from time to time be continued.

15.           Notice

Any notice or demand for payment by ING BANK hereunder shall without prejudice to any other effective mode of making the same be deemed to have been sufficiently made hereunder on me/us if sent by post to my/our last known place of business or (in the case of a limited company) its Registered Office and shall be assumed to have reached the addressee within 24 hours of posting and in proving such service it shall be sufficient to prove that the notice or demand was properly addressed and posted. Any such notice or demand or any certificate as to the amount at any time secured hereby shall be conclusive and binding upon me/us if signed by an officer of ING BANK.

16.           Governing Law

This Agreement and all contracts or other transactions arising out of this Agreement shall (unless otherwise expressly provided in such contracts or transactions) be governed by and interpreted in accordance with the laws of Hong Kong and I/we hereby irrevocably submit to the non-exclusive jurisdiction of the Hong Kong Courts.

17.           Interpretation

In this Agreement unless the context otherwise requires, the singular shall include the plural number also and vice versa. Paragraph headings are inserted for convenience of reference only and shall not affect the interpretation of this Agreement.

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Dated 8 Dec 2009_

SIGNED SEALED AND DELIVERED

by

 /s/ Yao Kexuan

in the presence of

SEALED WITH THE COMMON SEAL OF

Armco & Metawise (UK) Ltd AND SIGNED BY

 Yao Kexuan /s/ Yao Kexuan

for and on behalf of

Armco & Metawise (HK) Ltd

in the presence of :-

Chu Yi /s/ Chu Yi

* N.B. If executed by a limited company, a certified copy of the resolution of the Board of Directors of the company approving the execution of this Agreement (such resolution to be in the Bank's standard form) must be attached hereto.

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Assignment of Receivables

Date: 8 Dec 09

ING Bank N.V., Hong Kong Branch

39/ Fl., One International Finance Centre

1 Harbour View Street, Central

Hong Kong

Uncommitted Banking Facilities

In consideration of your agreeing to open any documentary and/or standby letter of credit (each, the "Letter of Credit") and/or to advance any loan (the "Loan") to us and/or to negotiate export bills under export documentary credit (the "Negotiation") for us from time to time as requested by us subject to your General Agreement by Customer(s), General Agreement Relating to Commercial Credits and the terms previously agreed by us and in addition to paying you Letter of Credit commission and/or Loan/Negotiation interest and/or other related bank charges, we hereby assign and transfer to you absolutely and unconditionally, as beneficial owner, all our rights, title and interest to which we are or may become entitled to as seller of Mineral ores & coal (the "Goods") referred to in any letter of credit, DP (document against payment), DA (d ocument against acceptance) or any other document acceptable to you which forms part of any sales transaction (where we are the seller thereof) which is related to or is connected with any Loan and/or any Letter of Credit and/or Negotiation, including our right to receive all and any proceeds of sale of the Goods (provided always that we remain obliged to perform all of our obligations in relation to the sale of the Goods). We agree that after discharging all our obligations related to any Loan and/or Letter of Credit and/or Negotiation, the balance of such sale proceeds, if any, shall be credited to our account with you.

This letter shall be governed by and construed in accordance with the laws of Hong Kong Special Administrative Region.

IN WITNESS WHEREOF this Assignment of Receivables has been executed as a deed by Armco & Metawise (HK) Limited and is intended to be and is hereby delivered by Armco & Metawise (HK) Limited as a deed on the date specified above.

1 The COMMON SEAL of

ARMCO & META WISE (HK) LIMITED

was hereunto affixed in the presence of:

/s/ Yao Kexuan

[Director][ Authorised Signatory ]

1 Use this execution block if client has a common seal

Assignment of Receivables

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ING

WHOLESALE BANKING

Date: 3 December 2009

Yao Kexuan

c/o Armco & Metawise (HK) Limited

Rm 1407, China Resources Building

26 Harbour Road, Wanchai,

Hong Kong

Guarantee executed in favour of ING Bank N.V., Hong Kong Branch

Dear,

We refer to the guarantee (the "Guarantee") executed by you in favour of ING Bank N.V., Hong Kong Branch ("ING").

Pursuant to the requirements of the Code of Banking Practice, we are writing to inform you of your option to elect whether such Guarantee would remain unlimited or specify a limit on the amount. It is important that you read and understand the Guarantee. You are recommended to obtain independent legal advice as to your obligations under the Guarantee.

In particular, we would like to draw your attention to the following:

• by executing the Guarantee, you may become liable for the debt of the borrower which is covered under the Guarantee (the "Borrower");

• your maximum liability under the Guarantee is limited to USD15,OOO,000 which means that you will only be liable for the actual and contingent liabilities of the Borrower owed to ING up to the amount as stated;

• following a default by the Borrower under the financing arrangement, you would be called upon to honour your obligations under the Guarantee, which shall be payable immediately upon our demand; and

• your obligations under the Guarantee will only be released upon receipt and retention by ING of all outstanding amounts owed by the Borrower and after a statutory period of six months.

You are strongly advised to obtain the financial information of the Borrower and engage your own financial advisor to give you advice on such financial information before signing this acknowledgement letter.

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Kindly sign the enclosed copy of this letter and send it back to us by way of acknowledgement of the foregoing.

Yours sincerely,

For and on behalf of

ING Bank N.V., Hong Kong Branch

Authorized Signatory

Acknowledged by:

Name:

Date: 8 Dec 2009

ING Bank N.V.

39/F, One International Finance Centre,

1 Harbour View Street, Central, Hong Kong

GPO Box 2837

Telephone + 852 2848 8488

Facsimile + 8522877 2627

Swift: INGBHK HH

www.ing.com

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ING

WHOLESALE BANKING

Continuing Guarantee

To:           ING Bank N.V.

Hong Kong Branch

In consideration of ING Bank N.V. (hereinafter called "ING BANK") from time to time making or continuing loans or advances to or coming under liabilities or discounting bills for or otherwise giving credit or granting time or affording banking accommodation or facilities to or on account of

Armco & Metawise (H.K ) Ltd

(hereinafter (together or individually) called "the Principal") or any of them I/We

Yao Kexuan

(hereinafter (together or individually) called "the Guarantor") do hereby guarantee or (if more than one) do hereby jointly and severally guarantee, unconditionally and irrevocably, to ING BANK as follows:

1.           The Guarantor will pay to ING BANK on demand all moneys obligations and liabilities whether past, present or future, actual or contingent which are now or may at any time hereafter be or become due, owing or incurred and unpaid to ING BANK anywhere from or by the Principal in any manner whatsoever (whether alone or jointly with any other person and in whatever style name or form and whether as principal or surety) including the amount of any acceptance or other credits or advances and of any cheques, notes or bills made, accepted, endorsed, discounted or paid and of any liability under guarantees, indemnities or other securities whatsoever from time to time issued by ING BANK for or at the request of the Principal together with interest to the date of payment at such rate s and upon such terms as may be payable by the Principal (or which would have been so payable but for the liquidation or other incapacity of the Principal) together with commission and other charges and all expenses (including legal and other costs on a full indemnity basis) howsoever incurred by ING BANK in relation to the Principal or the preparation and enforcement of this Guarantee or any other guarantee or security now or hereafter held by ING BANK for any of such moneys, obligations or liabilities or in obtaining or attempting to obtain payment whether from the Principal or otherwise.

2.           This Guarantee shall be a continuing security and shall cover and extend to secure any moneys which shall for the time being constitute the ultimate balance owing from the Principal to ING BANK on each separate account or in any manner whatsoever notwithstanding the bankruptcy, liquidation, incapacity or any change in the constitution of the Principal or the Guarantor (as the case may be) or any settlement of account or other matter whatsoever until determined by not less than six calendar months' notice in writing given to ING BANK by the

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Guarantor provided always that notwithstanding determination as to the Guarantor this Guarantee is to remain a continuing security and such notice of determination shall not affect the liability of the Guarantor for amounts owing or obligations or liabilities present or future certain or contingent incurred or arising out of the obligations or liabilities incurred prior to the expiration of such notice but maturing thereafter. In ascertaining the amount of such obligations and liabilities no account shall be taken of any bill, note or cheque or other creditable instrument which shall have been credited to the Principal's account at the expiration of such notice to determine but which is afterwards dishonoured, provided that, in the event of the Guarantor being an individual and dying or coming under a disability, such notice may be given on behalf of the Guarantor, by his legal representative or the committee, receiver.

3.           The obligations of the Guarantor hereunder shall be to make payment to ING BANK, in the currency in which the applicable obligation ought to have been or ought to be discharged by the Principal, strictly in accordance with the terms and provisions of any agreement or agreements, expressed or implied, between ING BANK and the Principal applicable to each respective obligation of the Principal, regardless of any law, regulation or decree, now or hereafter in effect, which affects or might in any manner affect any of such terms or provisions or ING BANK's rights as against the Principal.

4.           ING BANK may at any time without prejudice to this Guarantee and without discharging or in any way affecting the liability of the Guarantor hereunder and without giving notice to the Guarantor or any of them:

(i)           determine, renew, vary or increase any credit or facilities to the Principal or the terms and conditions in respect of any transaction with the Principal whatsoever;.

(ii).            grant to the Principal or to any other person any time indulgence or concession;

(iii)           renew any bills, notes or other negotiable or non-negotiable instruments or securities;

(iv)           vary, realize, exchange, release, modify or abstain from perfecting or enforcing or otherwise deal with, in whole or in part, any security or other guarantee or right which ING BANK may now or hereafter have from or against the Principal or any other person;

(v)           compound with, discharge, release or otherwise vary the liability of the Principal or any other person or Guarantor;

(vi)           make any concession to the Principal or do anything or omit or neglect to do anything which but for this provision might operate to exonerate or discharge the Guarantor from any obligation herein contained; and

(vii)           vary the rate of interest, commission or charge payable by the Principal to ING BANK.

5 (a) This Guarantee and the liability of the Guarantor hereunder shall not in any way be affected or diminished by reason of any security now or hereafter held by ING BANK in respect of the indebtedness of the Principal being irregular, defective, informal or void or otherwise unenforceable or by the failure of ING BANK to take any security or by any existing or future agreement by ING BANK as to the application of any advance made or to be made to the Principal.

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(b)           This Guarantee is to be in addition to and is not to prejudice or be prejudiced by any other security, negotiable instrument or guarantee which ING BANK may now or hereafter hold from the Guarantor or from any other person, firm or company or from or on account of the Principal.

6.           The liability of the Guarantor hereunder shall not be affected by the absence of or by any defective, excessive or irregular exercise of the borrowing powers of the Principal or the irregular or improper purported exercise thereof or the breach or want of authority by any person purporting to act on behalf of the Principal or because ING BANK's rights have become barred by reason of any legal limitation, disability, incapacity or by any other fact or circumstance (whether known or not known to ING BANK or the Guarantor) as a result of which any indebtedness or liability incurred or purported to be incurred by the Principal or by any other person purporting to act on behalf of the Principal is void or unenforceable by ING BANK against the Principal or if for any other reas on whatsoever the Principal is not or ceases to be legally liable to discharge any moneys, obligations or liabilities undertaken or purported to be undertaken on behalf of the Principal, it being agreed that in any such case the Guarantor shall be liable to ING BANK as principal debtor (notwithstanding the avoidance or invalidity of any assurance, security or payment on any ground whatsoever including but not limited to avoidance under any enactment relating to liquidation) in respect of that purported obligation, liability or indebtedness as if the same were wholly valid and enforceable and this Guarantee shall be construed as an indemnity for the same amount as that for which the Guarantor would have been liable by way of guarantee had a valid and enforceable indebtedness or liability as between the Principal and ING BANK been incurred. The Guarantor hereby agrees to keep ING BANK fully indemnified against all damages, losses, costs and expenses arising from any failure of the Principal to carry out any su ch purported obligation.

7.           As between ING BANK and the Guarantor, the Guarantor shall be deemed to be a principal debtor and ING BANK may demand payment hereunder from the Guarantor of any sum for the time being owing from the Principal or payable by, the Principal on demand notwithstanding that no demand may have been made upon the Principal.

8.           The Guarantor hereby warrants that he has not held and will not hereafter without the written consent of ING BANK take or hold on any account whatsoever any security from the Principal and in the event of the Guarantor taking or holding security now or at any time hereafter whether with or without the consent of ING BANK while any money obligation or liability (the payment whereof is hereby guaranteed) remains undischarged any such security and the documents relating thereto shall be forthwith unconditionally pledged or sub-pledged to and deposited with ING BANK to secure the obligation and liability of the Guarantor and if default is made in observing the preceding provisions of this Clause, the Guarantor will hold the same and all moneys Or income at any time received i n respect thereof in trust for ING BANK and as security for the liability of the Guarantor to ING BANK.

9.           This Guarantor shall take effect as a guarantee of the whole and every part of the moneys due or owing or payable and to become due or owing or payable as aforesaid and accordingly the Guarantor shall not be entitled as against ING BANK to any right of proof in the bankruptcy, liquidation or insolvency of the Principal or other right of a surety including the right of contribution from any other surety) discharging in whole or in part his liability in respect of the principal debt or to share in any security held or money received by ING BANK on account of

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the obligations or the Principal unless and until the whole of such moneys shall have first been completely discharged and satisfied or until such moneys shall have been discharged and satisfied in full shall the Guarantor take any step to enforce any right or claim against the Principal in respect of any moneys paid by the Guarantor to ING BANK hereunder or have or exercise any rights as surety in competition with ING BANK. Furthermore, for the purpose of enabling ING BANK to sue the Principal or prove in the bankruptcy, liquidation or insolvency of the Principal for the whole of such moneys as aforesaid, or to preserve intact the liability of any other party, ING BANK may at any time place and keep in a suspense account or a securities - realized account, for such time as ING BANK may think prudent, any moneys received, recovered or rel eased hereunder or under any other guarantee or security to the credit either of the Guarantor or of such other person or transaction (if any) as ING BANK shall think fit, without any intermediate obligation on ING BANK's part to apply the same or any part thereof in or towards the discharge of the moneys as aforesaid, or any intermediate right on the part of the Guarantor to sue the Principal or prove in the bankruptcy, liquidation or insolvency of the Principal in competition with ING BANK or so as to diminish any dividend or other advantage that would or might come to ING BANK, or to treat the liability of the Principal as diminished.

10.           If this Guarantee is determined ING BANK may continue the then existing accounts or open a fresh account or accounts with the Principal notwithstanding such determination and the liability, actual or contingent, of the Guarantor for the amount owing from the Principal at the date when such determination of this Guarantee shall become operative shall remain and shall not in any manner be reduced or affected notwithstanding any subsequent payment into or out of any of such accounts or any transactions whatsoever subsequent to such determination by or on behalf of the Principal.

11.           In respect of the liability of the Guarantor hereunder ING BANK shall have a lien on and be entitled to retain any security or negotiable or non-negotiable instruments or other property whatsoever now or at any time hereafter held by ING BANK on the account of the Guarantor whether for safe custody or otherwise. ING BANK shall further be entitled at any time to set off without giving any notice to the Principal any credit balance in any accounts of the Guarantor with ING BANK (whether current deposit or for a fixed term or otherwise or subject to notice or not) against the liability of the Guarantor to ING BANK hereunder and to apply such moneys as ING BANK may think fit in satisfaction of the said liabilities.

12.           If at the time any demand is made under this Guarantee and any amount shall be due or owing or payable to ING BANK from the Principal in a particular currency(ies) then the obligation of the Guarantor shall be to make payment in such currency(ies) but ING BANK shall be entitled at its discretion to require payment in any other currency(ies) of account at the rate(s) of exchange determined in good faith by ING BANK to be effective at the date of payment, or partly in one way and partly in the other:

13.           It is further agreed by the Guarantor that the Guarantor will indemnify ING BANK against any loss incurred by ING BANK as a result of any judgment or order being given or made for the payment of any amount due hereunder and such judgment or order being expressed in a currency other than that in which such amount is payable by the Guarantor hereunder and as a result of any variation having occurred in rates of exchange between the date as at which such amount is converted into such other currency for the purposes of such judgment or order and the date of actual payment pursuant thereto. The foregoing indemnity shall constitute a separate and independent obligation of the Guarantor and shall apply irrespective of any indulgence granted to the Guarantor from time to time an d shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.

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14.           Each payment to be made by the Guarantor hereunder shall be made to ING BANK, in the appropriate currency in accordance with the terms hereof, to the credit of ING BANK's account with such bank or banks located in the country of such currency or by such other method as shall be designated by ING BANK All such payments shall be free and clear of and without deduction or withholding for any tax of any nature now or hereafter imposed by any country or any sub-division or taxing authority thereof or therein or any federation or organization of which such country is a member. If any such payment shall be subject to any such tax or if the Guarantor shall be required to make any such deduction or withholding, the Guarantor shall pay to ING BANK such additional amount as may be necessary to enable ING BANK to receive, after all deductions and withholdings, a net amount equal to the full amount payable hereunder. As used in this clause the term "tax" includes all levies, imposts, duties, charges, fees, deductions, withholdings, turnover tax, transaction tax, stamp tax and any restrictions or conditions resulting in a charge.

15.           Any settlement or discharge between ING BANK and the Guarantor shall be subject to the condition that no security or payment to ING BANK by the Principal or any other person shall be avoided or reduced by virtue of any provisions or enactments relating to bankruptcy, liquidation or insolvency for the time being in force and if any such security or payment shall be so avoided or reduced ING BANK shall be entitled to recover the value or amount thereof from the Guarantor subsequently just as if such settlement or discharge had not occurred.

16.           Where any security is held by ING BANK for the liability of the Guarantor hereunder ING BANK shall be at liberty in its absolute discretion to retain such security after the repayment of all sums that are or may become due or the discharge to ING BANK of all liabilities from the Principal notwithstanding any release, settlement, discharge or arrangement given or made by ING BANK on or as a consequence of such repayment, until the expiration of any period or periods within which such repayment or discharge could be avoided or reduced and if at any time before the expiration of any such period or periods a petition shall be presented to a competent court for an order for bankruptcy or winding up (as the case may be) of the Principal, or the Principal shall commence to be w ound up voluntarily ING BANK shall be at liberty and notwithstanding as before mentioned to continue to retain such security or any part thereof for and during such further period as ING BANK in its absolute discretion shall determine and it is agreed that in such event such security shall be deemed to have been and to have remained held by ING BANK as and by way of security for the payment to ING BANK of all or any Sums which shall or may become due and owing to ING BANK from and by the Guarantor either under and by virtue of the terms and conditions of this Guarantee in the event of and upon or after any avoidance of any conveyance assignment, assurance, security or payment under any provisions or enactments relating to bankruptcy or liquidation or under and by virtue of the provisions of this Guarantee and any demand made by ING BANK pursuant to such provisions.

17.           Any notice or demand made by ING BANK hereunder shall be in writing signed by one of ING BANK's officers and may be served by leaving the same at, or sending it through the post in a prepaid envelope addressed to the company, firm or person on whom the demand is to be made, at the address last known to ING BANK as the registered or principal office, or, as the case may be, place of business or abode of such company firm or person and such demand or notice so served shall be effective (notwithstanding that it may later be returned undelivered) at the time it was so left or, as the case may be, at the expiry of forty-eight hours after it was posted excluding

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Saturdays, Sundays, and public holidays. In proving such service it shall be sufficient to prove that the envelope containing the notice or demand was properly addressed, stamped and posted. Any notice or demand served by telex or facsimile shall be effective at time of sending.

18.           A certificate signed by an officer of ING BANK as to the amount at any time due and owing by the Principal shall be conclusive evidence as against the Guarantor of the amount so due and owing in any legal proceedings in all courts of law or elsewhere.

19.           Irrespective of whether the Principal or the Guarantor is a company, individual or partnership, the liability of the Guarantor shall continue in force notwithstanding any change in the constitution of the Principal or the Guarantor and extend to all indebtedness and liabilities incurred after any such change occurs and shall not be affected by the death, bankruptcy or disability of the Principal Or the Guarantor. This Guarantee shall extend to all advances or general banking facilities or other accommodation whether past present or future granted by ING BANK to the Principal notwithstanding its absorption by or amalgamation with any other company or companies and to all advances or general banking facilities or other recommendation from any such absorbing or amalgamating company in like manner as if such absorbing or amalgamating company were named in and referred to herein

20.           In the event of an order being made upon ING BANK under Section 211 of the Companies Ordinance of Hong Kong (Cap. 32) or any statutory modification or re-enactment thereof directing ING BANK to pay any sum to a liquidator of the Principal such sum when paid by ING BANK shall be recoverable from the Guarantor and shall be repaid by the Guarantor on demand in writing by or on behalf of ING BANK and a release, discharge or settlement made or given by ING BANK on the faith of the payment into the account of the Principal with ING BANK of any sum which by virtue of the terms of any such order ING BANK shall be directed to pay to such liquidator shall be treated and accepted by the Guarantor as having been made or given by ING BANK upon the express condition that the same shal l be subject and without prejudice to ING BANK's right to recover payment of such sum from the Guarantor as provided herein.

21.           The liability of the Guarantor hereunder shall not be discharged, reduced or affected by any compromise, composition or arrangement sanctioned under Section 20 of the Bankruptcy Ordinance (Cap.6) or Section 166 of the Companies Ordinance (Cap.32) or any statutory modification or re-enactment thereof respectively (whether ING BANK has agreed to such compromise, composition, arrangement or not) and where by virtue of any such compromise, composition or arrangement the liability of the Principal to ING BANK or any part of such liability is transferred to any other company, this Guarantee shall take effect as if the expression "the Principal" includes such other company. Where by virtue of any agreement with the Principal and ING BANK or either or any of them any person assu mes all or any part of the liability of the Principal or if more than one any of them to ING BANK in substitution for the Principal the liability of the Guarantor hereunder shall not be discharged, reduced or affected but the Guarantee shall take effect as if the expression "the Principal" includes such person.

22.           All money payable hereunder by the Principal, the Guarantor or any person paying or purporting to pay on behalf of the Principal and/or the Guarantor shall be paid without any right of set-off in respect of moneys owing by ING BANK to the Principal or to the Guarantor and if the Principal maintains more than one account with ING BANK, ING BANK may demand payment hereunder of moneys owing on anyone or more of such accounts notwithstanding that in respect of any other such accounts moneys may be owing by ING BANK to the Principal or the

- 46 -

Guarantor. For the avoidance of doubt, there is no obligation on the part of ING BANK to consolidate all the accounts of the Principal and/or the Guarantor before ING BANK makes any demand pursuant to the provision of this clause.

23.           The determination of this Guarantee by anyone or more of the Guarantor (if more than one) shall not release or determine or otherwise affect the operation of this Guarantee in relation to the other or others of the Guarantor and this Guarantee shall thereafter (subject to any determination by such other or others of the Guarantor) operate as a continuing guarantee by such other or others as a continuing guarantee by such other or others for the full amount recoverable under this Guarantee.

24.           Each of the Guarantor (if more than one) hereby agrees and consents to be bound by the provisions of this Guarantee notwithstanding that any other or others of them who were intended to execute or be bound by the provisions hereof may not do so or be effectually bound hereby for any reason whatsoever and notwithstanding that this Guarantee may be invalid or unenforceable against anyone or more of them whether or not the deficiency is known to ING BANK.

25.           If anyone or more of the provisions of this Guarantee or any part thereof shall be declared or adjudged to be illegal, invalid or unenforceable under any applicable law, such illegality, invalidity or unenforceability shall not vitiate any other provision of this Guarantee which shall remain in full force and effect.

26.           The liability of the Guarantor if more than one hereunder shall be joint and several and every agreement and undertaking on the part of the Guarantor shall be construed accordingly. ING BANK shall be at liberty to release of discharge anyone or more of the Guarantor (if more than one) from the obligations of this Guarantee or to accept any composition from or make any other arrangements with anyone or more of the Guarantor without thereby prejudicing or affecting ING BANK's rights and privileges against the other of the Guarantor.

27.           This Guarantee shall be governed by and construed for all purposes in accordance with the laws of Hong Kong and the Courts of Hong Kong shall have non-exclusive jurisdiction over any proceedings in connection herewith and the enforcement of the security hereby created.

28.           In this Guarantee:

(a)           The expression "ING BANK" where the context permits shall include its successors in title and/or assigns:

(b)           The expression "the Guarantor" where the context permits shall be construed as referring to each such person individually and anyone or more of such persons collectively and shall include his/her respective personal representatives and the committee, receiver or other person lawfully acting on behalf of such other person and all agreements, obligations and liabilities of the Guarantor herein contained or implied are joint and several and shall be construed accordingly;

(c)           The expression "the Principal" where the context permits shall include all or anyone or more of the Principal and shall also include their respective successors in title and/or assigns;

- 47 -

(d)           The expression "this Guarantee" shall be construed as including and extending to any separate or independent covenant, stipulation or agreement herein contained;

(e)           The expression "person", "Principal", "Guarantor" shall include persons, firms, companies and any other corporate body; and

(f)           In these presents, if the context permits or requires the singular number shall include the plural number and vice versa.

SIGNED SEALED AND DELIVERED

Dated this 8 day of Dec 2009

BY Yao Kexuan

Whose address is at

No 95, Cultural Road

Jinshui District, Zhengzhou

He'nan Province, China

ID No.                      G36909575

In the presence of: Chu Yi

N,B, A certified copy of the resolution of the Board of Directors/Shareholders of the company approving the execution of this Guarantee must be attached hereto.

INGCRED 0004

EX-10.19 7 cnamexsales.htm ARMET (LIANYUNGANG) RENEWABLE RESOURCES CO., LTD. SCRAP METAL SALES CONTRACT BETWEEN DATED FEBRUARY 21, 2010.

Exhibit 10.[__]

[Translated from Chinese to English]

Portions of this Exhibit 10.[__] marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.

Scrap Metal Sales Contract

Contract Number: 10FG001S

Date: February 21, 2010

Location: WeiAn

Seller: Armet (Lianyungang) Renewable Resources Co., Ltd.

Buyer: [                      ]

Both parties based on equality, voluntariness, equitable and mutually beneficial, accordance to “Contract Law of People’s Republic of China” and other relevant laws, regulation accept the following contract, both parties have accepted the following terms.

1.   Both parties have been fully explained and understood provisions of this contract to each other.

2.   Both Parities fully understood the terms and provisions of this contract, and understand compliance of all these terms.

3.   Both parties agreed to comply with all terms of this contract.

I           Product name, size, volume, quality standard, delivery date and quantity

Produce Name,                                 Size,           Quality Standard,      Volume (tons/month),                                                    ;                        Delivery Date

Scrap metal, Crushed aggregates -              13,000 Monthly order                         Charging materials - 6,000                   Monthly order

         Heavy scrap - 4,000                   Monthly order

Total                                                                              23,000

II           Unit Price (Taxes included): to be determined on the 25th day of every month to calculate following month’s unit price per ton.

III           Delivery Discrepancy: Plus or minus 10%

IV           Transportation method, freight insurance and other expenses

Departure Location: Liangyungang, China Armet’s metal scrap facility,

Receiving location: [                      ]’s scrap metal storage. All transportation and insurance expenses are paid by the seller.

V                 Reasonable loss determination and calculation

      The calculation is based on the measurement by the loadometer of [                      ].

VI                 Quality requirement

       The delivered products should not mix with airtight containers, inflammable, explosives, and radioactive materials. The buyer has the right to send staff to monitor the production on site.

VII                  Inspection criteria

        The inspection conclusion is based on the scene inspection at Armet (Lianyungang) Renewable Resources Co., Ltd. The buyer confirms the inspection conclusion at the scene. Both parties negotiate to resolve if any disagreement may occur.

VIII                   Bill Settlement and payment

           After the products have been delivered and measured at [                      ], the buyer should make the payment within 7 days after the buyer has booked the invoice from the seller.

IX                       Changes in the contract

            The terms of the contract can be changed upon the agreement of the buyer and seller. The change takes effect upon the signatures and seals by both parties.

X                         Term

The contract is valid from February 21, 2010 to December 31, 2010.

XI                        Force majeure

When the unpredictable, unavoidable, and insurmountable events occur such as natural disaster and fire and deprive one party the capabilities to execute all or partial obligations in the contract, the party is exempt from penalty. The party that encounters force majeure shall notify the counterpart about the event by telephone or telegraph and provide the supporting evidence on the force majeure issued by authorized institution within 14 days after the occurrence of the event. If the impact of force majeure lasts more than 30 days, both parties should negotiate either to change the terms of the contract, continue the execution, or terminate the contract.

XII                        Disputes settlement

              The parties should negotiate to settle the disputes related to the contract. If the parties can’t reach agreement, either party can file lawsuit to the local court.

XIII                           Miscellaneous

                      This contract has four original copies, and each party holds two original copies. Each copy has the same legal force. The contract takes effect upon signatures and seals by both parties.

Buyer: [                      ]

Authorized Representative: /s/ Fazhan Yang

(Company Seal)

Seller: Armet (Lianyungang) Renewable Resources Co., Ltd.

Authorized Representative: /s/ Ji Zhang

Phone: 0518-68083830

Fax: 0518-68081111

(Company Seal)

EX-14.1 8 cnamexethics.htm CODE OF ETHICS

Exhibit 14.1

CHINA ARMCO METALS, INC.

Code of Business Conduct and Ethics

The upholding of a strong sense of ethics and integrity is of the highest importance to China Armco Metals, Inc. (the "Company") and critical to its success in the business environment. The Company's Code of Business Conduct and Ethics embodies the Company's commitment to such ethical principles and sets forth the responsibilities of the Company to its shareholders, employees, customers, lenders and other stakeholders. The Company's Code of Business Conduct and Ethics addresses general business ethical principles, conflicts of interests, special ethical obligations for employees with financial reporting responsibilities, insider trading laws, reporting of any unlawful or unethical conduct, political contributions and other relevant issues.

GENERAL PRINCIPLES

It is the Company's firm belief that effective business relationships can only be built on mutual trust and fair dealing. The Company and all its directors, officers and employees, to whom the Company's Code of Business Conduct and Ethics is applicable, will conduct themselves in accordance with the standards established herein.

The Company's Code of Business Conduct and Ethics outlines the fundamental principles of legal and ethical business conduct as adopted by the Board of Directors of the Company. It is not intended to be a comprehensive list addressing all legal or ethical issues which may confront the Company's personnel. Hence, it is essential that all personnel subject to the Company's Code of Business Conduct and Ethics employ good judgment in the application of the principles contained herein.

CONFLICTS OF INTEREST

Directors, officers and employees of the Company are expected to make decisions and take actions based on the best interests of the Company, as a whole, and not based on personal relationships or benefits. Generally, a "conflict of interest" is an activity that is inconsistent with or opposed to the best interest of the Company or one which gives the appearance of impropriety. As conflicts of interest can compromise the ethical behavior of Company personnel, they should be avoided.

Employees should avoid any relationship which would create a conflict of interest. Employees are expected to disclose such relationships and conflicts to their immediate supervisors. Conflicts of interest involving those with whom the Company does business should also be disclosed in writing to such third parties. Any waivers of conflicts of interest must be approved by the Board of Directors or an appropriate committee.

Members of the Board of Directors are to disclose any conflicts of interest and potential conflicts of interest to the entire Board of Directors as well as the committees on which they serve. Directors are to excuse themselves from participation in any decision of the Board of Directors or a committee thereof in any matter in which there is a conflict of interest or potential conflict of interest.

Set forth below is specific guidance in respect to certain conflicts of interest situations. As it is not possible to list all conflicts of interest situations, it is the responsibility of the individual, ultimately, to avoid and properly address any situation involving a conflict of interest or potential conflict of interest. Company personnel who wish to obtain clarification of the Company's conflicts of interest principles or further guidance with respect to the proper handling of any specific situation should consult his or her immediate supervisor, the Company's President or Chief Financial Officer or the

Company's outside legal counsel.

Proper Payments. All individuals should pay for and receive only that which is proper. Company personnel should not make improper payments for the purposes of influencing another's acts or decisions and should not receive any improper payments or gifts from others for the purposes influencing the decisions or actions of Company's personnel. No individual should give gifts beyond those extended in the context of normal business circumstances. Company personnel must observe all government restrictions on gifts and entertainment.

Supervisory Relationships. Supervisory relationships with family members present special workplace issues. Accordingly, Company personnel must avoid a direct reporting relationship with a family member or any individual with whom a significant relationship exists. If such a relationship exists or occurs, the individuals involved must report the relationship in writing to the Board of Directors.

FINANCIAL REPORTING RESPONSIBILITIES

As a public company, it is of critical importance that the Company's filings with the Securities and Exchange Commission and other relevant regulatory authorities be accurate and timely. Hence, all Company personnel are obligated to provide information to ensure that the Company's publicly filed documents be complete and accurate. All Company personnel must take this responsibility seriously and provide prompt and accurate answers and responses to inquiries related to the Company's public disclosure requirements.

The Chief Executive Officer  and Principal Financial and Accounting Officer of the Company have the ultimate responsibilities of ensuring the integrity of the filings and disclosure made by the Company as required by the rules and regulations of the Securities and Exchange Commission and other relevant regulatory authorities. In the performance of their duties relating to the Company's public disclosure obligations, the President, Principal Financial and Accounting Officer and all Company personnel must:

·   Act with honesty and integrity;

·   Provide information that is accurate, complete, objective, fair and timely;

·   Comply with rules and regulations of federal, state, provincial and local governments and other relevant public and private regulatory authorities;

·   Act in good faith with due care, competence and due diligence;

·   Respect the confidentiality of information acquired in the course of the performance of one's duties;

·   Promote ethical and proper behavior in the work environment; and

·   Report to the Chairman of the Audit Committee any conduct that the individual believes to be a violation of law of the Company's Code of Business Conduct and Ethics.

- 2 -

INSIDER TRADING

Insider Trading Policy

The Company's Board of Directors has adopted a comprehensive Insider Trading Compliance Policy that applies to all "Insiders" (as defined therein). Any breach of the Insider Trading Compliance Policy by an Insider to whom the Company's Code of Business Conduct and Ethics is applicable shall be treated as a breach of the fundamental principles of legal and ethical business conduct as outlined herein.

Regulation FD

Regulation FD (Fair Disclosure) implemented by the Securities and Exchange Commission provides that when the Company, or person acting on its behalf, discloses material nonpublic information to certain enumerated persons (in general, securities market professionals and holders of the Company's securities who may well trade on the basis of the information), it must make public disclosure of that information. The timing of the required public disclosure depends on whether the selective disclosure was intentional or unintentional; for an intentional selective disclosure, the Company must make public disclosures simultaneously; for a non-intentional disclosure, the Company must make public disclosure promptly. Under the regulation, the required public disclosure may be made by filing or furnishing a Form 8-K, or by another method or combinat ion of methods that is reasonably designed to effect broad, non-exclusionary distribution of the information to the public.

It is the policy of the Company that all communications with the press be handled through the Company's President and/or Vice President of Investor Relations.

Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is strictly forbidden.

Applicability of Insider Trading Regulations to Securities of Other Companies. The Company's Insider Trading Policy shall also apply to material nonpublic information relating to other companies, including the Company's customers, vendors or suppliers ("business partners"), when that information is obtained in the course of employment with, or other services performed on behalf of the Company. All employees should treat material nonpublic information about the Company's business partners with the same care as is required with respect to information relating directly to the Company.

DUTY TO REPORT INAPPROPRIATE AND IRREGULAR CONDUCT

All employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within the Company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to the Company's Chief Executive Officer  and Principal Financial and Accounting Officer; provided, however, that the incident must be reported to any member of the Company's Board of Directors if it involves an alleged breach of the Company's Code of Business Conduct and Ethics by the Chief Executive Officer  and Principal Financial and Accounting O fficer. Any failure to report such inappropriate or irregular conduct of others shall be treated as a severe disciplinary matter. It is against Company policy to retaliate against any individual who reports in good faith the violation or potential violation of the Company's Code of Business Conduct and Ethics of another.

- 3 -

POLITICAL CONTRIBUTIONS

No assets of the Company, including the time of Company personnel, the use of Company premises or equipment and direct or indirect monetary payments, may be contributed to any political candidate, political action committees, political party or ballot measure without the approval of the Company's Board of Directors.

COMPLIANCE PROGRAM

In order to implement the principles of the Company's Code of Business Conduct and Ethics and to establish a compliance program, the Company has adopted the following policies:

Access to Information. The Board of Directors encourages the presentation at meetings by managers who can provide additional insight into matters being discussed. The Company's executive management will afford each member of the Board of Directors full access to the Company's records, information, employees, outside auditors and outside counsel.

Audit Committee. The Audit Committee of the Board of Directors is responsible for the engagement of our independent public accountants, approves services rendered by our accountants, reviews the activities and recommendations of our internal audit department, and reviews and evaluates our accounting systems, financial controls and financial personnel.

Insider Trading Compliance.  The Board of Directors have adopted an Insider Trading Compliance Policy for the purposes of educating and ensuring that all persons are fully aware of the rules and regulations of the Securities and Exchange Commission with respect to insider trading. All Company personnel shall have full access to the President or Chief Financial Officer and the Company's outside counsel with respect to any insider trading questions or issues.

Financial Reporting; Legal Compliance and Ethics. The Board of Directors' governance and oversight functions do not relieve the Company's executive management of its primary responsibility of preparing financial statements which accurately and fairly present the Company's financial results and condition, the responsibility of each executive officer to fully comply with applicable legal and regulatory requirements or the responsibility of each executive officer to uphold the ethical principles adopted by the Company.

Corporate Communications. Management has the primary responsibility to communicate with investors, the press, employees and other stakeholders on a timely basis and to establish policies for such communication.

Access to President and Principal Financial and Accounting Officer. All Company personnel shall be accorded full access to the Company's President and Principal Financial and Accounting Officer with respect to any matter which may arise relating to the Company's Code of Business Conduct and Ethics; provided, however, that all Company personnel shall be accorded full access to the Company's Board of Directors if any such matter involves an alleged breach of the Company's Code of Business Conduct and Ethics.

EX-21.1 9 cnamexsub.htm SUBSIDIARIES OF THE COMPANY

EXHIBIT 21.1

China Armco Metals, Inc.

Subsidiaries of the Company

Name	Country of Incorporation	Dated Created
Armco & Metawise (HK), Ltd.	Hong Kong	July 13, 2001
Henan Armco & Metawise Trading Co., Ltd.	China	June 6, 2002
Armet (Lianyungang) Renewable Resources Co., Ltd.	China	January 9, 2007
Armco (Lianyungang) Holdings, Inc.	China	June 4, 2009

EX-23.1 10 cnamex23-1.htm CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference by China Armco Metals, Inc. in Amendment No. 1 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 on Form S-3 and the registration statement on Form S-8 (No. 333-162774) of our report dated March 31, 2010 on the consolidated balance sheets of China Armco Metals, Inc and Subsidiaries as of March 31, 2010 and 2007, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended appearing in China Armco Metals, Inc. Annual Report on Form 10-K for the year ended March 31, 2010.

/s/Li & Company, PC

Li & Company, PC

Skilling, New Jersey

March 31, 2010

EX-31.1 11 cnamex31-1.htm RULE 13A-14(A)/15D-14(A) CERTIFICATION

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Kexuan Yao, certify that:

1.  I have reviewed this annual report on Form 10-K for the nine month period ended December 31, 2009 of China Armco Metals, Inc. (the “registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2010	/s/  Kexuan Yao
	Kexuan Yao Chairman, President and Chief Executive Officer (Principal Executive Officer)

EX-31.2 12 cnamex31-2.htm RULE 13A-14(A)/15D-14(A) CERTIFICATION

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Fengtao Wen, certify that:

1.  I have reviewed this annual report on Form 10-K for the nine month period ended December 31, 2009 of China Armco Metals, Inc. (the “registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2010	/s/ Fengtao Wen
	Fengtao Wen Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1 13 cnamex32-1.htm SECTION 1350 CERTIFICATION

Exhibit 32.1

Section 1350 Certification

In connection with the Annual Report on Form 10-K of China Armco Metals, Inc. (the "Company") for the year ended December 31, 2009 as filed with the Securities and Exchange Commission (the "Report"), I, Kexuan Yao, Chief Executive Officer of the Company, and I, Fengtao Wen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 31, 2010	/s/    Kexuan Yao
	Kexuan Yao Chairman, President and Chief Executive Officer
Date: March 31, 2010	/s/    Fengtao Wen
	Fengtao Wen Executive Vice President and Chief Financial Officer

This certification accompanies this Transition Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10.15

DBS Bank

Date: 22 April 2009

Our ref: P/HBHBC/00020/09

Armco & Metawise (H.K.) Limited

Room 1407

China Resources Building

26 Harbour Road

Wanchai, Hong Kong

BANKING FACILITIES

Dear Sirs,

DBS Bank (Hong Kong) Limited (the “Bank”, which expression shall include its successors and assigns) is pleased to advise that it is prepared to consider making available or continuing to make available the banking facilities detailed below (the “Facilities”) to the Borrower described below, subject to the provisions of this facility letter and the attached “Terms and Conditions Governing Banking Facilities and Services”.

A. BORROWER:

Armco & Metawise (H.K.) Limited

B. FACILITY LIMITS:

Type(s) of Facility                                                                           Facility Limit(s)

Back to Back Letter of Credit                                                                                     USD 12,000,000.-

C. PRICING AND CONDITIONS:

Unless otherwise provided herein, interest and commission(s) on the Facilities will be charged at the Bank’s standard rate that may be varied from time to time at the Bank’s discretion.

Back to Back Letter of Credit (“Back to Back L/C”)                                                                                                Maximum Validity: 6 months.

Issue documentary sight/usance L/C on back-to-back basis Conditions:

1)Lodgement of original Master L/C issued by acceptable bank in form & substance acceptable to the Bank. Terms and conditions of the master letter of credit must be acceptable to the Bank, must be strictly complied with and not varied or waived without the Bank's prior written consent.

2)   The Bank to retain control over goods / title documents (refer Notes Item (i) mentioned below) under each L/C (refer Notes Item (ii) mentioned below).

3)   Evidence of applicable cargo insurance cover.

4)   5% cash margin (or pledged deposit) for each outstanding of L/C issuing. The Bank reserves the right to ask for top-up of cash margin in case of adverse market condition.

5)   Usance Master L/C within 90 davs tenor.

DBS Bank (Hong Kong) Limited

Enterprise Banking

16 Floor, The Center

99 Quee’s Road Central

Central, Hong Kong

Tel 852 3668 5533

Fax 852 2169 0350

www.dbs.com

Armco & Metawise (H.K.) Limited                                                                                                       &# 160;             Our ref: P/HBHBC/00020/09

Notes:

(i) "control over goods / title documents" means: Any L/C issued by the Bank to call for full set original marine bills of lading "issued to order of the Bank" or "to order + blank endorsed by shipper", Charter party bill of lading is allowed if covered by Master L/C.

(ii) Bill of lading indicating any clause relating to "delivery of goods without surrender of original bill of lading" or similar wordings is not acceptable.

Pricing/ Commission of Trade	Export Bills Collection Commission
Facilities:	1st USD50,000.-	1/8%
	Balance	1/16%
	L/C Opening Commission/ Commission in Lieu of Exchange
	1st USD50,000.-	1/4%
	Balance	1/8%
	Commission in Lieu on Import Bills for Back to Back Deal
	Waive
	Interest
	Export L/C bill transit interest: 2.75% per annum over LIBOR or
	Bank's Cost of Fund on the outstanding amount from drawdown
	until repayment in full, as conclusively calculated by the Bank.
Set Up Fee of Facilities:	USD10,000.-

D. SECURITY AND CONDITIONS PRECEDENT:

Unless otherwise approved by the Bank, the Facilities will be made available or continue to be made available to the Borrower provided that the Bank has received each of the following, in a form and substance satisfactory to the Bank:

1 . This letter duly executed by the Borrower.

2.           General Commercial Agreement duly executed by the Borrower.

3.         (i) All monies Charge on Cash Deposit(s) duly executed by the Borrower in favour of the Bank;

(ii) the pledged deposit or cash margin in a principal amount of not less than 5% of the outstanding of Back to Back L/C Facility at any time, together with all interest accrued thereon. (The Bank has the right to require a margin on top of the amount specified above as pledged deposits)

4.           Letter of Comfort duly executed by China Armco Metals, Inc.

- 2 -

Armco & Metawise (H.K.) Limited                                                                                                                                 Our ref: P/HBHBC/O0020/09

5.         Guarantee and Indemnity for an unlimited amount duly executed by Yao Kexuan.

6.   Guarantee Agreement ~ to secure all indebtedness owed by the Borrower to the Bank duly executed by Yao Kexuan

7.   Evidence on acceptance of appointment as process agent for Yao Kexuan in respect of service of legal process under the documents to which it is a party.

8.   All documents and/or other requirements for complying with Customer Acceptance Policies or similar requirements imposed by governing authorities and/or the Bank.

9.   Original or Certified copies of all necessary consents, approvals and other authorizations (including but not limited to those required by relevant governing authorities and/or the resolutions of the directors and shareholders of the Borrower and/or any security provider(s) in connection with the execution, delivery, performance and enforcement of this letter and all other documents mentioned above, if applicable.

10. Original or Certified copies of all necessary registrations and filings as may be required by relevant governing authorities in connection with the execution, delivery, performance and enforcement of this letter and all other documents mentioned above, if applicable.

11. Such other documents, items or evidence that the Bank may request from time to time.

E. FACILITY ADJUSTMENT AND TOP-UP REQUIREMENT

The Borrower shall comply with (and procure any security provider to comply with) at all times the security coverage ratio(s) specified in this letter or as may be determined by the Bank from time to time. If any of the security coverage ratio(s) shall at any time fall below the level required by the Bank, the Borrower shall provide additional security acceptable to the Bank and/or reduce the outstanding of the Facilities designated by the Bank, in order to comply with the relevant requirements within the time limit imposed by the Bank from time to time. Without prejudice to the rights of the Bank under this letter, the Bank is authorized, from time to time, to uplift, realize, collect or sell as the Bank may think fit and without being liable for any loss to the Borrower or any security provider, if applicable, all or any part of the securities pledged to the Bank without any prior notice to the Borrower or any security provider, if applicable, and to apply the proceeds in or towards satisfaction of the Borrower's indebtedness owing to the Bank.

F. COVENANTS AND UNDERTAKINGS:

The Borrower undertakes to the Bank that it will:

·   ensure that all consents, licences, approvals, registrations and filings (as appropriate) in connection with the Facilities, guarantee or securities as may be provided in relation to the Facilities granted hereunder are duly obtained, completed and will remain in fun effect throughout the period when there is outstanding under the Facilities .

·   promptly submit to the Bank:

a)   a certified copy of the audited (and, as appropriate, consolidated) financial statements of the Borrower and all corporate security provider(s), if applicable, as soon as they are available, but in any event within 10 months after the end of the financial year end and at any other time requested by the Bank;

ENT/SYS/0426(09/08)

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Armco & Metawise (H.K.) Limited                                                                                                                                 Our ref: P/HBHBC/O0020/09

b)   with reasonable promptness, details of any litigation, arbitration or administrative proceeding current or, to its knowledge, threatened or commenced against it; and  

c)   other information that the Bank may request from time to time .

·   immediately inform the Bank of:

a)   any change of the Borrower's directors or beneficial shareholders (except where the Borrower is a listed company) or amendment to its memorandum or articles of association or equivalent constitutional documents.  

b)   any substantial change to the general nature of the Borrowers existing business.

c)   any factor which may inhibit, impair or delay performance by the Borrower or the security provider(s), if any, of the obligations under any loan and security documents to which they are a party.

d)   the failure to continue to obtain consents, licenses, approvals, registrations and filings (as appropriate) in connection with the granting of the Facilities and/or the provision of securities (including without limitation guarantee(s) in relation to the Facilities granted hereunder throughout the period when there is outstanding under the Facilities.

G. OTHER TERMS AND CONDITIONS

The Facilities are available at the sole discretion of the Bank and are in all respects uncommitted. The Bank may at any time immediately modify, terminate, cancel or suspend the Facilities or any part of it, or otherwise vary the Facilities or any part of it, without the consent of the Borrower or any other person. Unless the changes are not within the Bank's control, the Bank shall give reasonable notice to the Borrower for any variation to the Facilities affecting the interest, fees and charges and the liabilities or obligations of the Borrower, and such variation shall take effect after the expiration of such notice which may be given by the Bank by such means as the Bank may at its discretion see fit.

Notwithstanding any provisions stated in this letter, the Facilities are repayable on demand by the Bank. The Bank has the overriding right at any time to require immediate payment of all principal, interest, fees and other amounts outstanding under this letter or any part thereof and/or to require cash col1ateralisation of all or any sums actually or contingently owing to it under the Facilities.

The "Terms and Conditions Governing Banking Facilities and Services" attached and/or referred to in this letter form an integral part of this letter and the Borrower agrees to observe and be bound by them.

This letter and the Facilities shall be governed by the laws of the Hong Kong Special Administrative Region and the parties hereto hereby submit to the non-exclusive jurisdiction of the Hong Kong Courts.

Please signify your understanding and acceptance of this offer by signing and returning to us the duplicate copy of this letter and provide each of the items under the section headed "Security And Conditions Precedent" above, for the attention of Mr. Alex Wong ("Designated Relationship Manager"), within one month from the date of this letter, otherwise the offer will lapse at the discretion of the Bank.

We enclose a set of documents which should also be completed and returned to us. If you have any queries, please contact the Designated Relationship Manager at telephone number 3668-5555.

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Armco & Metawise (H.K.) Limited                                                                                                                                 Our ref: P/HBHBC/O0020/09

We are pleased to be of service to you

Yours faithfully,

For and on behalf of

DBS Bank (Hong Kong) Limited

/s/ ________________________

Authorized Signature

FN/mh Encl.

We hereby confirm our understanding and acceptance of all the terms and conditions set out in (i) this letter and (ii) the "Terms and Conditions Governing Banking Facilities and Services" attached to this letter and our agreement to be bound by all of them.

Signed for and on behalf of

Armco & Metawise (H.K.) Limited

/s/ Kexuan Yao

Authorized signor(s)

Signature of Witness

/s/__________________________

Name of Witness:

Hong Kong Identification / Passport No:

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Terms and Conditions Governing Banking Facilities and Services

These Terms and Conditions form an integral part of the banking facility letter ("Banking Facility Letter") from DBS Bank (Hong Kong) Limited to the Borrower to which they are attached.

1.      Definitions and Interpretation 1. 1 The terms below used in these Terms and Conditions shall have the corresponding meanings: "Agreement" the Banking Facility Letter together with these Terms and Conditions (including any supplement) and any other terms and conditions and/or agreement referred to In the Banking Facility Letter   "Assets" includes present and future properties, revenues and rights of every description.   "Bank" DBS Bank (Hong Kong) Limited which includes all its branches and offices wherever situated and its successors, assigns and any other person with which the Bank mergers or consolidates. "Banking Facility Letter" the banking facility letter(s) (including all its attachments, schedules, appendices, amendments and supplements issued by the Bank in relation to facilities extended by the Bank to the Borrower, to which these Terms and Conditions are attached. "Bank's Cost of Funds" the cost of funding of the Bank as may be determined by the Bank from l~TT1e lO time "Borrower" the Borrower specified " the Banking Facility letter, and where there is more than one Borrower, all references to the Borrower" shall mean all such persons or anyone or more of them. "Business Day" a day on which commercial banks in Hong Kong and, if applicable, the principal financial center of the relevant currency are open for business (other than a Saturday) "Exchange Rate" the rate for converting one currency into another currency that the Bank determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and billing on the Borrower "Facilities" the banking facilities (or any pan of It/ specified in the Banking Facility Letter and such other facilities, loans, overdrafts, advances, etc. from time to time made available by the Bank. "Fixed Deposit Rate" the deposit interest rate for fixed deposits pledged to the Bank as security for Its corresponding Banking Facility.   "HIBOR" the Hong Kong Interbank Offered Rate quoted by the Bank for the relevant period.    "LIBOR" the London Interbank Offered Rate quoted by the Bank for the relevant period.    "Prime Rate" the rate which the Bank announces or applies from time to time as its prime rates for lending Hong Kong Dollars, or where applicable, for lending United States Dollars.   "Services" any banking services provided by the Bank. 1.2           Unless a contrary ,indication appears, a reference in the Agreement to:   a)a person Includes an individual, a company, sole proprietorship, partnership or body unincorporated and its successors and assigns.   b)any document includes a reference to that document 2S amended, varied, supplemented, replaced or restated from time to time: and c) a provision of law is a reference to that provisions as amended or re-enacted I .3           Unless the context otherwise requires, words importing the singular include the plural and vice versa and the neuter gender includes the other genders. 1 4           Any matter required to be done on a particular date which is not a business day shall be done on the next following business day. 1.5           Headings are for convenience only and are to be Ignored in construing these Terms and Conditions.   2. Application 2.1 These Terms and Conditions shall apply to any Facilities and Services which the Bank in its sole discretion, may agree to make available and provide to such extent and in such manner as the Bank thinks fit. 2.2 These Terms and Conditions shall be subject to such other terms and conditions which may be specified by the Bank from time to time In the Banking Facility Letter, other documents, agreements or applications. 2.3 In the event of any conflict or inconsistency between these Terms and Conditions and the provisions of the Banking Facility Letter, the latter shall prevail. 3.Payments 3.1 Unless otherwise agreed In writing by the Bank, all payments made under the Agreement shall be made in immediately available funds to the Bank before noon on the due date. 3.2 All payments by the Borrower to the Bank shall be made without any set-off, counterclaim, deduction, withholding or condition of any kind, If the Borrower is compelled by law to make any withholding or deduction, the sum payable by the Borrower shall be Increased so that the amount actually received by the Bank is the amount it would have received if there had been no such withholding or deduction. 3.3 Payment by the Borrower to the Bank shall be in the currency of the relevant liability or, If the Bank so agrees in writing, In a different currency, in which case the conversion to that different currency shall be made at the Exchange Rate'. The borrower shall be liable for any shortfall if the converted currency is less than the outstanding liability. 3.4 Any monies paid to the Bank in respect of the Borrower's obligations may be applied in or towards satisfaction of the same or placed to the credit of a suspense account with a view to preserving the Bank's rights to prove for the whole of the Borrower's outstanding obligations. 3.5 If any payments paid to the Bank in respect of the Borrower's obligations are required to be repaid by virtue of any law relating to insolvency, bankruptcy or liquidation or for any other reason the Bank shall be entitled to recover such sums from the Borrower as If such monies had not been paid. 4.Drawings Against Unlearned Amounts In the event the Bank permits the Borrower to draw against funds to be collected or transferred from any account(s), the Borrower shall on demand reimburse the Bank In full the amount so drawn If the Bank does not receive the funds in full at the time the Bank ought to have received the same or if, after the Bank has accepted the transfer, the Bank is prevented from collecting or freely dealing with the funds In accordance with its usual banking practice. 5. Letter of Credit For facility relating to Letters of credit calling for cargo receipt, If so agreed to be granted by the Bank, the beneficiaries and each of the individual limits are .subject to the Bank's approval on a case-by-case basis. The Bank may from time to time carry out at the Borrower's expense updated searches of the said beneficiaries and all related (costs and fees may be debited 10 the borrowers) account. 6. Account Payable Financing Payment under the Facility shall be made directly to the relevant supplier. The suppliers and each of the individual facility limits are subject to the Bank's approval on a case-by-case basis The Bank may from time to time carry out at the Borrower's expense updated searches of the said suppliers and all related costs and fees may be debited to the Borrower's account 7.Negotiation under Documentary Credit If a discrepancy is found in the underlying letter of credit documents, then notwithstanding anything contained in the Agreement, (the Bank may at its absolute discretion refuse to negotiate any such documentary credit and/or bill(s)).   8.Documents against Acceptance Bills Purchased and Documents against Payment Bills purchased with Insurance Cover 8.1 The Bank has or may from time to time take out and do all things as appropriate or necessary to effect and maintain an insurance policy with such reputable insurance company or companies on such terms and in such value to cover such risk(s) related to the Facility as the Bank may deem fit, and the Borrower agrees to reimburse the Bank, without deduction, for all monies expended including but not limited to insurance premium In relation thereon. 8.2 The Borrower is required to comply with all the terms and conditions of such policies as shall from time to time be entered into between the Bank and any insurance company as the Bank may deem fit and the Borrower undertakes and warrants not to do or omit to do or permit or cause or suffer to be done any act, matter or thing whatsoever whereby any such policy of insurance may be rendered void or voidable or whereby any premium may be increased. 8.3 Such arrangement shall not extinguish the Borrower's obligations under the Facility, and the Borrower agrees to render such co-operation and assistance as the Bank may require to connection with any claim or other matter arising in connection with any such insurance policy. 9. Treasury Facilities 9.1 For any foreign exchange, options, futures, swaps or other structured or derivative products, applications will only be considered by the Bank subject to its receipt of the documentation that the Bank may require from time to time. Any treasury related contract will be entered into by the Borrower at the rate(s) quoted by the Bank at its absolute discretion. 9.2. The terms included or referred to in the relevant confirmation issued by the Bank shall apply to all treasury related transactions between the Borrower and the Bank. 9.3 The Borrower warrants that it will enter into any transaction with the Bank solely in reliance upon Its own judgment and at its own risk, and the Bank shall not be responsible for any loss or other consequences suffered or incurred by the Borrower, whether or not acting on advise received from the Bank. 9.4 The treasury related contract amounts shall be subject to the relevant facility limit(s) (if any) stipulated in the Banking Facility letter and the risk exposure limits set (either advised or otherwise) by the Bank from time to lime. 9.5 The Bank may from time to time mark the Borrower's outstanding treasury related contracts to market by reference to the prevailing market rate or quotation in order to calculate the Borrower's gain or loss under the contracts. If the Bank determines that the Borrower has incurred a loss under any such contracts by the then prevailing mark­-to-market calculation, the Borrower shall forthwith pay such sum or deliver such collateral as required by the Bank to cover such loss. 9.6 The Bank has the right to close out and/or terminate any or all outstanding treasury a)   the Borrower fails to perform any terms of the Agreement including its default In payment;   b)the outstanding contracts amounts exceed the facility Iimit(s) (if any) or the Bank's risk exposure limit(s);   c)the Borrower shall become insolvent or suspends payment of any debt when due or subject to any bankruptcy or winding-up petition; or d)any circumstances have arisen or continued which, in the Bank's opinion, might adversely affect the Bank's position under the relevant contracts Upon closing-out or termination of the treasury related (Contracts, the Borrower shall pay to the Bank any loss incurred under those contracts. Such loss shall be determined by the Bank (acting in good faith) based on the replacement market value of the contract, so closed-out or terminated, which determination shall be binding and conclusive on the Borrower. 10,           Application of Proceeds   10.1 The Bank may apply the net proceeds of any sale, disposition or dealing of the security of the Borrower towards discharge of the Borrower's obligations to the Bank In whatever priority that the Bank may determine. 10.2 The Borrower shall, upon demand by the Bank:   a)Provide such further security in form and value as maybe, required in the opinion of the Bank sufficient to secure any of the Borrower's obligations to the Bank; and   b)execute and deliver to the Bank any documents in form and substance satisfactory to the Bank over any of the Borrower's assets as the Bank specifies in any such demand 10.3 Save for negligence or willful default. The Bank shall not be liable for any loss or damages or depreciation in value of any security granted in favour of any Bank due to the Bank's exercise of any of its rights over of any security 11. Interest 11.1 The Bank shall charge interest on any sum(s) outstanding or owing by the Borrower from time to time. Unless otherwise specified, interest will accrue on a daily basis and shall be calculated, compound and payable on such basis and in such manner as the Bank may determine at its absolute discretion. 11.2 Save as otherwise specified, interest will be calculated by reference to the actual number of days elapsed and a 365-day year if the Facility is in HK Dollars, Pounds Sterling, Singapore Dollars or Malaysia Ringgit or a 360-day year if the Facility is in any other approved foreign Currencies 11.3 If the interest rate in respect of any Facility is expressed to be a margin over the Prime Rate, the Bank shall be entitled, in its reasonable discretion, at any time to substitute the Bank's Cost of Funds in place of the Prime Rate in calculating the interest payable under such Facility. If the Interest rate in respect of any Facility’s expressed to be a percentage less than the Prime Rate, the Bank shall be entitled, in its reasonable discretion, at any time to replace such interest rate by the Bank's Cost of Funds as the applicable interest fate in respect of such facility, 11.4 If any amount under the Banking Facility Letter is unpaid on due date or exceeds the permitted facility limit, such overdue or excess sum will be subject to the Bank's then prevailing overdue or over limit interest rate, and may be compounded monthly or at such other intervals as the Bank may determine. The Bank may without prejudice to Its other rights, increase the interest rate on the entire amount outstanding under the Banking Facility letter if any amount becomes overdue.  

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LETTER OF COMFORT

To: DBS Bank. (Hong Kong) Limited

Date 15/5/2009

Letter of Comfort

Dear Sirs,

We hereby acknowledge that DBS Bank. (Hong Kong) Limited (the "Bank") at our request or at its discretion has granted or will from time to time grant credit facilities to our Subsidiary Armco & Metawise (H.K.) Limited (the "Subsidiary").

We confirm that the aforesaid credit facilities are beneficial to our group comprising ourselves and our subsidiaries, and irrevocably undertake that as long as any credit facility is in effect and/or any obligations or liabilities of the Subsidiary to the Bank whether actual or contingent are outstanding:

1.           We shall not and shall not enter into any agreement or arrangement to dispose of, reduce or create any security interest in or grant any option over our shareholding or interest in the Subsidiary without giving one month's prior written notice to the Bank. In the event of any such disposal, reduction or creation of any security interest in or option over our shareholding or interest in the Subsidiary, we will forthwith on demand by the Bank deposit with the Bank by way of security prior to such disposal, reduction or creation, such securities which in the sale judgment of the Bank are satisfactory and sufficient to secure the obligations of the Subsidiary towards the Bank.

2.           We will ensure that the Subsidiary will operate at all times as a going concern. We will further keep and maintain the Subsidiary in a sound financial position which will enable the Subsidiary to meet all its obligations and if necessary we will make funds available to the Subsidiary to discharge its obligations and liabilities to the Bank and undertake not to take or permit any action which could result in the Subsidiary being unable to carry on its business or otherwise defaulting under the credit facilities.

Yours Faithfully

/s/ Kexuan Yao________________________

signed by Kexuan Yao

Director

duly authorized for and on behalf of

ChinaArmco Metals, Inc.

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Guarantee Agreement (Translation)

Yao Kexuan

(Guarantor)

And

Armco & Metawise (H.K.) Limited

(Borrower)

And

DBS (H.K.) Limited

(Lender)

Guarantee Agreement

2009-05-15

This <Guarantee Agreement> (The “Contract”) is signed by the below parties on 2009-05-15:

1.           Guarantor:

Yao Kexuan

Address:

ID Number:

2.           Borrower:

Armco & Metawise (H.K.) Limited

Address:

3.           Lender:

DBS (H.K.) Limited

Address:

Based on:

1. On April 22, 2009, the Lender of this Contract issue to the borrower of this contract <Bank Credit Facilities: Armco & Metawise (H.K.) Limited>, the borrower had, on __________,  accepted and signed agreeing to all terms with in the letter of the Bank Credit Facilities( the above grant letter includes all following addendums, amendments, and changes, the “Grant Letter” ); The Grant Letter states: after the fulfillment of all its terms and conditions, the lender will provide to the borrower a loan or credit facilities of USD 12,000,000.00.

2. According to the Grant Letter and/or the request of the lender, the borrower must obtain Yao Kexuan (the Guarantor of the Contract)’s consent to be responsible for guarantee for the full loan. This requirement is a prerequisite for the Borrower to receive or continue the loan and or credit facilities.

According to the Grant Letter and/or the Lender’s above arrangement and requests, the Guarantor voluntarily provide the guarantee for the borrower; Through the negotiation of all the parties, have come to the conclusion of the below terms for all parties to follow.

1. Guarantee of loan amount

Under this Contract, the loan amount guaranteed by the Guarantor is the full amount owed by the Borrower under the Grant Letter, including principle, interest, penalty interests, penalties, compensation for loss, fees, expenses, related arbitration and court fees, legal fees etc.

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2. Period of Guarantee

The period of Guarantee is in effect as of the date of signing, till two years after the expiration of all the loads under the Grant Letter. During the period of Guarantee, the Lender has the rights to ask the Guarantor to take responsibility of the guarantee.

3. Range of Guarantee

The Guarantor agrees: Once requested by the Lender, immediately repay all remaining loan amounts owned by the Borrower under the Grant Letter, including but not limited to principle, interest, penalty interests, penalties, compensation for loss, fees, expenses, related arbitration and court fees, lawyer’s fees etc.

4. Nature of Guarantee

4.1 Basic nature of this guarantee

Under this contract, the Guarantor carries a non-condition, non-revocable joint and several responsibility.

4.2 Other attached nature of the Guarantee

(1) This Guarantee is a independent guarantee, its validity is not effected or limited by any contract and agreements or nullification agreements relating to the loan.

(2) The right given to the Lender under this Contract is not affected or limited by other contracts or agreements. Under any circumstances, as long as the Borrower does not pay back the loan when due, the Lender has the right to request for the Guarantor to carry out his responsibility to the loan, without having to claim the rights of any other parties( including but not limited to the Borrower, other Guarantor, provider of collateral, etc. )or arbitration or any other action.

(3)This Guarantee is a continuous guarantee, and will be affective in the duration of the guarantee, till the loan is paid in full.

(4) As long as the Guarantor takes responsibility to the Lender for any current, future, existing or potential loans under the Grant Letter, the Guarantor will be responsible for guaranteeing these loans; this responsibility will not be affected by any unforeseen element.

(5) Under this Contract, the guarantee responsibility taken by the Guarantor is unconditional, and will not be excused or lessen due to any of the following reasons:

(a) Any correction, addition, or removal to the terms and conditions of the Grant Letter;

(b) Any relief of time or other conditions or any discounts given to any other party by the Lender;

(c) Any agreements made by the Lender with any other party or the Lender waiving or changing any of his rights to any other party;

(d) Any party’s change in legal position or composition, including stock exchange, bankruptcy, liquidation, merger, takeover, reorganizing, death, incapacitated, or other conditions of other limitations, or the change of any party’s name or business scope;

(e) Any party, for any loan, providing any other guarantee, mortgage, collateral or any other assurance.

(6) If there is more than one Guarantor under this contract, the responsibility each Guarantor carry is individual and jointly, the Lender has the rights to demand the amount of the loan from multiple or one Guarantor.

5. Guarantee of payment of loan

5.1 At the expiration of terms of any of the Borrowers loans, including the advanced expiration due to any legal, statutory circumstances, or terms on agreements or contracts between the Lender and the Borrower, due to any reason if the Borrower is unable to at its due date payback the capital, interest, or any other required payments, within 7 days of receiving the payment notice from the Lender, the Guarantor is to pay back in full the amount on the payment notice in its indicated amount, currency, method, date, location and any other  payment instruction, unconditionally as the primary borrower to the lender.

5.2 Other than if there is any major error, the payment notice issued by the Lender has obsolete rights, and it’s contain has restricting rights to the Guarantor.

6. Rights to claim

6.1 Before all loan amount is paid off, the Guarantor cannot received or exercise any rights to claim, or demand any payment of loan from the Borrower before the Lender.

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6.2 Before the loan is paid in full, the Guarantor cannot, without written consent of the Lender, take the Lender’s place and demand payment of the loan or accept any other party’s other guarantee or assurance. If the Guarantor violates these terms and receives guarantee, such guarantee should be regards as the Guarantor receiving on behalf of the Lender. The Guarantor is to transfer all related documents, collaterals, and terms and conditions to the Lender.

7. Objection rights

The Guarantor under this contract, within the allowance of the law, agrees to forgo all rights to objection.

8. Declaration and Commitment

8.1 The Guarantor declares the followings:

(1) The Guarantor is a legal entity in accordance with all use of the law with full capacity for civil conduct.

(2) The Guarantor signed this Contract voluntarily, and willingly, without the coercion of any party. The Guarantor’s responsibility under this contract is legal, binding, and enforceable according to its terms and conditions.

(3) The Guarantor will obtain and maintain all authorization, approval, records, and registrations applicable and legally required relating to this contract, and comply with all the terms and conditions, and take any other required actions, to ensure the Guarantor has the legal rights to sign this contract and to perform the contractual obligations, and to ensure this contract is legal, valid, binding, can be used as evidence in arbitrations and can be enforced.

(4) From time to time, at the request of the Lender, the Guarantor will sign any documents or contracts or perform any actions and arrangements to ensure the rights of the Lender under this contract.

(5) At the request of the Lender, the Guarantor will pay to the Lender all fees and expenses to the negotiation, drafting, printing, signing, enforcement, or any other action, relating to this contract, including legal fees, and arbitration fees.

(6) At the request of the Lender, the Guarantor will pay to the Lender all fees and expenses relating to stamp-duty, notary fee, registration fee, and any other similar tax and duty relating to this contract, and at the request of the Lender compensate for any liabilities due to the delayed or missing payments of the above tax and duties.

(7) If the Guarantor fails to pay all the items as stated in (5) and (6), at requested by the Lender, the Guarantor should immediately pay to the Lender all related items, and pay to the Lender an interest aroused from the amount from the date of payment due till the date when it is paid in full at a rate the Lender sees fit.

9. Tax

All the items paid by the Guarantor within the limit of this contract, cannot deduct any tax of any nature, and cannot for the reasons of offsetting any allowances, or any other reason deduct or reduce. If any deduction or reduction of the above tax items is required by law, the Guarantor should pay to the Lender an additional sum in the amount and as compensation to the Lender for the difference.

10. Currency

10.1 The Guarantor under this contract shall guarantee to the Lender the currency of the loan specified on the Grant Letter, or any other currency with the written consent of the Lender.

10.2 If the Lender receives, with this contract as the basis, from the Guarantor any sum that is in a currency different from the currency stated in 10.1, the Lender has the rights to convert the received sum into the above discusses currency as soon as its procedural processing time, the Guarantor shall make up the difference in payment amount to the Lender. Under any circumstances, the Guarantor will pay in full to the Lender any fees and expenses resulting from the exchanging of currencies.

10.3 The responsibility under this term is an independent responsibility, in addition to the Guarantor’s responsibilities under this contract. This term may be taken as an independent agreement for the purpose of legal action and enforcement.

11. Certification and Basis

11.1 The certifications and basis for the notice of payment by the Lender, with in its scope of business, in the case the Borrower has not made the loan payments to the Lender, other than if there is major errors, its contents is binding to the Guarantor.

11.2 Any documentation or certifications signed by the Lender’s management, employee, or legal representative, regarding the amount of this loan, other than if there is major errors, its contents are binding to the Guarantor.

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12 Lien and Direct Deduction

Guarantor agrees that when the Borrower has breached the contract, besides all the other rights conferred by law, the Lender is entitled to the lien on the properties owned or controlled by Lender and appointee at any time, no matter it is for property preservation or other purpose. In addition, regardless of the place where the bank accounts were opened or paid, the Lender has the right to withdraw the funds from any account opened by the guarantor (if the account is certificate of deposit, the Lender has the right to withdraw the fund when the deposit matures), to offset the due debts owed by the Borrower to the Lender under this contract.

13 Transfer

13.1 Without written consent by the Lender, the guarantor shall not transfer all or any rights or obligations under this contract to any third party.

13.2 When the Lender follows the legal procedure to transfer all or any rights under the Credit Extension Letter to any third party, the Lender can transfer the corresponding rights under this contract to the transferee without necessity to obtain consent from the guarantor in advance. After the transfer is completed, the guarantor shall continue to take liabilities on guaranties as previously.

14 Waiver of Immunity

The signing and execution of this contract is a pure business activity. The guarantor has not any immunity, and irrevocably agrees to waive any potential immunity that may be applicable in the future.

15 Notice

15.1 The notices or other communications related to the contract shall be in written, via telex, fax, or letters.

15.2 If the recipient is the guarantor and/or Borrower, the notices shall be delivered to the legal or office address or the latest telex or fax number known to the Lender. If the notices are delivered via telex or fax, they shall be regarded as being delivered as soon as they are sent. If the notices are mailed out, under the condition that the address is correct and postage is paid, the notices shall be regarded delivered seven days later, no matter whether the mail is returned eventually. But the notices or communications that are from the guarantor to the Lender take effect only when the Lender has actually received the notices.

16 Rights Reservation

That the Lender delays or fails to, or partially exercise the rights conferred by this contract at any time shall neither be regarded as the action to give up the right nor impact the capability of the Lender to further exercise this or any other rights under this contract. That the Lender does not pursue the liabilities of the guarantee under this contract at any time shall not hinder the Lender from pursuing the related or unrelated liabilities under this contract in the future. The rights conferred by this contract to the Lender do not hinder the obgliee from being entitled to other legal rights.

Clause 17 Clause Severability

Under the circumstance that any clause of this contract is regarded illegal, invalid or inappropriate for compulsory enforcement subject to any law, the legal force of other clauses of this contract remains unimpaired (the aforementioned clause that is illegal, invalid or inappropriate for compulsory enforcement shall no longer be a component of this contract), and the validity, effect, and capability for compulsory enforcement of other  clauses shall not be impaired.

18 Applicable Laws

This contract is subject to the laws of People’s Republic of China.

19 Jurisdiction

19.1 All parties involved in this contract agree that the disputes related to the contract shall be under the non-exclusive jurisdiction of Chinese courts. The complaints filed to Chinese court or the compulsory enforcements requested by the Lender to the guarantor per the terms of the contract are under the jurisdiction of the court where the Lender resides. If the property of the guarantor is located in other places, the Lender has the right to choose the jurisdiction of either court where the Lender resides or the property is located. No matter which jurisdiction the Lender chooses, the guarantor shall give the consent.

19.2 The above clause shall not hinder the Lender from filing complaint or requesting compulsory enforcement to any court that has jurisdiction or pursue in one or multiple jurisdiction areas simultaneously or at different times.

20 Legal Binding

This contract has legal bindings on the guarantor, Lender and their corresponding heirs.

- 11 -

21 Come into Force

This contract shall come into force upon being signed off by the guarantor, Borrower, and Lender. If government approval and registration are required by Chinese laws and regulations for the contract to take effect, the Guarantor shall follow the legal procedure to apply for approval and registration.

22. Notarization

After the signing of this contract, if deem necessary by the Lender, at the request of the Lender, the Guarantor, and Borrower should act in full cooperation with the Lender to apply for a notarized loan agreement at the Shenzhen city Notarization Facilities. If the Guarantor fails to comply with the terms of the contract after the above procedure, the Lender may, without prior notice to the Guarantor, directly ask the governing court to enforce the contract.

23. Other

23.1 The titles of this terms and conditions is just for the reasons of reference, it does not affect the definition of the terms.

23.2 This Contract is the accessory contract to the Grant Letter, and has the same legal rights as the Grant Letter.

This Contract shall have four copies of the same format; each party will hold one copy. The Lender shall hold the extra copy, for use of notarization.

Guarantor: /s/ Yao Kexuan

Signaure

Borrower: Armco & Metawise (H.K.) Limited)

Stamp and signature: /s/ Yao Kexuan

Lender: DBS Bank (Hong Kong) Limited

Stamp and signature: /s/ ____________________

- 12 -

Mortgage or Change Details

(Companies Ordinance ss.80 (1), 81(1), 82(1), 91(1), & 91 (5))

Companies Registry

Form M1

Important Notes:

Please read the accompanying notes before completing this form.

Please print in black ink

Company number

0763031

1. Company Name

Armco & Metawise (H.K.) Limited (“the Company”)

2. Instrument Creating or Evidencing the Mortgage or Charge.

*note 10

Description of Instrument

Charge on Cash Deposit(s) to secure Liabilities of the Deposit(s) (“Charge”)

Date of Creation

DD/MM/YYYY

3. Amount Secured

Use Continuation Sheet A is space is insufficient

Please refer to Continuation Sheet A

4. Particulars of Mortgagee or Chargee

*Note 11

Name

DBS Bank (Hong Kong) Limited (“Bank”)

*Note 12

Address

11th Floor, the Center, 99 Queen’s Road Central, Hong Kong

*Note 5

Presentor’s Reference

Name: DBS Bank (Hong Kong) Limited

Code:

Address: 11th Floor the Center

99 Queen’s Road Central

Hong Kong

Tel:

Fax:

E-mail Address:

Reference:

M1 COD (Own) (12/07)

Specification No. 3/2007 (Revision) (Dec. 2007)

- 13 -

Form M1

Company number

0763031

5. Commission, Discount or Allowance payable to the Subscriber of the Debenture

*Note 13

Amount/ Percentage

N/A

6. Short Particulars of the Property Mortgaged or Charged

Use Continuation Sheet B if space is Insufficient

a. Landed Property

1st property

2nd property

b. Other Types of Property

Please refer to Continuation Sheet B and the Definition in Continuation Sheet A

7. Date of Acquisition of Property

N/A

This Form includes 1 Continuation Sheet(s) A and 1 Continuation Sheet(s) B

Signed: /s/ Kexuan Yao

Name:

*Note 7

Company/Mortgagee/Chargee*

(Director/Secretary/Authorized Representative)

Date:15/05/2009

Delete whichever does not apply

- 14 -

Form M1   Continuation Sheet A Company number 0763031

Amount Secured (Section 3)

All sums of money and liabilities whether actual or contingent, as at the date of the Charge or in the future owing or incurred to the Bank on any account whatsoever by the Company whether as principal or surety and whether from the Company solely or from the Company jointly with any other person or persons or from any firm in which the Company may be a partner and in whatever style, name or form, and including (without limitation):

(i) the amount of (01) any loans, acceptances or other credits or advances made to or for the accommodation or at the request of the Company, (02) any notes or bills, made, accepted, endorsed, discounted or paid by the Bank, (03) any liability under guarantees, indemnities, foreign exchange contracts (spot, forward or otherwise), documentary or other credits or any other instruments whatsoever assumed or given or entered into by the Bank for or at the request of the Company and (04) any liability under all hire purchase agreements and financial, equipment, motor vehicle and other leases entered into between the Bank and the Company; and

(ii) (01) interest to the date of payment (notwithstanding any demand, judgment, death, dissolution, insolvency or other incapacity of the Company or any other person) at such rates and upon such terms as may from time to time be payable, (02) all commissions, discounts, fees and other charges payable to the Bank and (03) all sums, disbursements and other expenses paid or incurred by the Bank, in relation to the Bank's provision of banking or credit facilities or other financial accommodation (including, without limitation, pursuant to hire purchase agreements and financial, equipment, motor vehicle and other leases) to the Company, the implementation of the provisions of, or exercise of rights under, the Charge or the perfection or enforcement (or attempted perfection or enforcement) of the security or any other guarantees or encumbrances for any indebtedness of the Company to the Bank, including all reasonable lega l costs and all other costs and expenses and any exchange control premiums, penalties or expenditure on a full indemnity basis (collectively "Liabilities").

Definitions: (Applies both for Continuation Sheet A and B)

"Bank" shall include its successors and assigns and any of its branches and persons deriving title under the Bank;

"Deposit" means all deposits, credit balances and monies as at the date of the Charge or in the future deposited by the Company in accounts maintained with or held by the Bank, whether such accounts are opened in the name of the Company individually or jointly with any other person or persons or whether such deposits, credit balances and monies are represented or evidenced by instruments having specifications or dates different from the original instruments representing or evidencing them or held in different accounts, as the same may from time to time be increased or decreased, and including, for the avoidance of doubt, all interest (compounded or otherwise) accrued thereon and other amounts of principal added thereto or otherwise, and the expression "Deposit" shall also include, for the avoidance of doubt, any currency into which s uch sums may from time to time be converted and all renewals and/or replacements of such sum(s);

"dissolution" means, in relation to any person, the supervision, winding-up, liquidation or bankruptcy of that person, and any equivalent or analogous procedure under the law of any jurisdiction and "dissolved" shall be construed accordingly;

"encumbrance" means any mortgage, charge, pledge, lien or other encumbrance, priority or security interest whatsoever over or in any property, assets or rights or interests of whatsoever nature and includes any agreement for any of the same and "encumber" shall be construed accordingly;

"the security" means the Charge and the security constituted by it.

Specification No. 3/2007 (Revision)(Dec. 2007)

- 15 -

Form M1   Continuation Sheet B Company number 0763031

Short Particulars of the Property Mortgaged or Charged (Section 6)

Description of Property Mortgaged or Charged

(1)           By way of first fixed charge and agreement to charge :

the Deposit and all right, title and interest of the Company whatsoever, present and future, thereto and therein, together with any certificates of deposit or other instruments or securities evidencing title, or otherwise relating, thereto and any account to which the same is credited (Clause 3 of the Charge).

(2)           By way of set-off:

any sum standing to the credit of anyone or more of the accounts of the Company with the Bank (whether current, deposit, loan or of any other nature whatsoever and whether subject to notice or not and whether such sum or sums is/are unmatured deposits and including, without limitation, the account to which the Deposit is credited) wheresoever situate (Clause 5.5 of the Charge).

Notes

By Clauses 4.2 (a) and (b) of the Charge, the Company undertakes and agrees that, during the continuance of the security, the Company shall not:

(i)           Withdraw the Deposit or any part thereof or any other amounts for the time being subject to the Charge

except with the Bank's prior consent;

(ii)           Encumber, assign, transfer or otherwise deal with or grant or suffer to arise any third party rights over

or against the whole or any part of the Deposit or any other amounts for the time being subject to the security, or purport so to do.

EX-10.16

PRIVATE AND CONFIDENTIAL

Armco & Metawise (H.K) Limited

Room 1407, China Resources Building, 26 Harbour Road,

Wanchai, Hong Kong

Date: March 25th, 2009

Dear Sirs,

Uncommitted Trade Finance Facilities for United States Dollars Ten Million Only (USD 10,000,000.00)

We, RZB Austria Finance (Hong Kong) Limited (the "Lender") are pleased to set out the terms and conditions upon which we wJlJ consider requests made by the Borrower (as specified below) for the Following facilities (the "Facilities").

1. Borrower(s):

Name:                                                                           Armco & Metawise {H.K} limited

Country of Incorporation:                                                                Hong Kong SAR

Company Registration No.:                                                                           763031

Address:                                                                Room 1407, China Resources Building,

26 Harbour Road,

Wanchai, Hong Kong

2. Type and Amount of the Facilities:

(a)   Total Facilities Amount: USD 10,000,000.00 (United States Dollars Ten Million Only) maximum but in no circumstances shall the outstanding of any type of Facility exceed the respective facility sub-limits set out below.

(b)   Available for:                                                                                                Sub- Limit

(i)   Back-to-Back L/Cs:  Issuance of commercial letters of

credit (the ''L/C'') against the lodging of master L/Cs

acceptable to the lender (the "Master L/C");                                                                                     USD 10, 000,000.00

(ii)           Master L/C Financing against

documents presented under Master

L/C by advancing funds to the Borrower;

USD 10,000,000.00

RIB Austria Finance (Hong Kong) Limited

Tel: (852) 2869 6610      (852) 2730 2112

Fax : (852) 2730 6028

SWIFT: RZBAHKHH                                

New Add: Unit 2106-8, 21/F., Tower  1, Lippo Center, 89 Queensway, Hong Kong

Armco & Metawise / No. 2009032508059000

(iii)           Export L/c Financing against

documents presented under export

L/Cs acceptable to the lender (the

"Export l/C"1 by advancing funds to

the Borrower.                                                                                     USD 10,000,000.00

3.Commission, Charges (excluding out of pocket expense) and Interest:

L/C issuance commission:                                                                           1/8% quarterly, min USD 500.00

L/C financing/Negotiation commission:                                                                                     1/8% flat, min USD 500.00

Commission-in-lieu:                                                                                     1/8% flat, min USD 500.00

Collection commission:                                                                                     1/10% flat, min USD 500.00

Interest Rate:

-L/C Financing/Discounting before acceptance:                                                                                                Cost of funds + 250bp p.a.

-L/C Financing/Discounting after acceptance: Cost of Funds + 200bp p.a. for the L/C issued by Agricultural Bank of China, Bank of China, Industrial & Commercial. Bank of China, China Construction Bank and Bank of Communications; and case by case for the L/C issued by other banks.

Cost of funds shall be determined at the sole discretion by the lender by reference to its funding cost for the relevant interest period and relevant currency in respect of the Facilities under this letter.

Without prejudice to any clauses or any of the lender's rights contained in this letter, the lender may recall the Facilities at anytime at its sole discretion upon the occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidify in the funding market. For the avoidance of doubt, the lender has the sole discretion to decide whether or not such event has occurred. The lender will inform the Borrower upon occurrence of any market disruption.

All other charges of the lender are subject to the lender's Schedule of Charges.

The interest payable on L/C Financing / Discounting shall be calculated in US Dollars ("USD") on the basis of actual days elapsed and 360 days per year and shall be deducted up-front from the proceeds of L/C Financing / Discounting.

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Armco & Metawise / No. 2009032508059000

The Lender reserves the right at anytime to amend the commission and charges and to debit the Borrower's account with interest, charges, fees, insurance premiums, normal lender charges, expenses incurred on the Borrower’s behalf and all monies in connection with the Facilities.

4. Purpose:

To facilitate the Borrower's purchase of iron ore, chrome ore, manganese ore and nickel ore (the "Goods") from suppliers acceptable to the lender (individually or collectively the "Supplier”) by L/C for sales against Master L/C or Export L/C to the final off-takers acceptable to the lender (individually or collectively the “Off-taker").

5. Tenor:

Final maturity of the Facilities is May 31st, 2010.

Notwithstanding the above, the Facilities are repayable on demand and the lender has the overriding right at any time to require immediate payment under the Facilities.

6. Application of Monies:

The Lender may apply any sum received from the Borrower to payor settle any principal, interest, fees or any other amount due under the Facilities in such proportions and order and generally in such manner as the Lender shall determine.

7. Collateral/Security:

(a)           Letter of Pledge;

(b)           Trade Finance Security Assignment;

(c)           Power of Attorney to act and sue on behalf of the Borrower;

(d}           Third Party Charge over Cash Deposits on the accounts held with Raiffeisen

Zentralbank Oesterreich AG Beijing Branch (the “Bank”) from the Borrower in favor of the lender.

(el           Unconditional and irrevocable personal guarantee issued by Mr. Yao

Kexuan (the “Guarantor") in favor of the lender with the Net Worth Statement duly signed by the Guarantor in form and substance acceptable to the Lender.

8. Applications for the facilities:

(a)   Each application made by the Borrower to use any of the Facilities in whole or in part shall be a    utilization request by the Borrower to the lender to extend financing on the terms and conditions set out or referred to in this letter. No commitment by the lender to extend financing shall arise under this letter until any application by the Borrower is accepted by the lender either expressly or by its extending such facilities to the Borrower.

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Armco & Metawise / No. 2009032508059000

(b) Such applications shall be made, where applicable, on the lender's standard forms and supported by such documentation that the lender may require.

(c)   No applications by the Borrower to use any of the Facilities will be accepted by the lender unless  the Borrower complies with the terms and conditions set out or referred to in this letter, the conditions precedent set out in Clause 9  (Conditions Precedent) and such other conditions as the lender may impose from time to time.

(d)   Acceptance by the lender in respect of any application made by the Borrower is subject to the Lender's overriding right of repayment on demand, amending, canceling and/or restructuring any of the Facilities and/or pricing at the Lender's sole discretion.

9. Conditions Precedent:

Granting of the Facilities by the lender is discretionary in nature. Each utilization request by the Borrower is further subiect to Clause 8 (Applications for the Facilities) and the fulfillment of the following conditions precedent:

(a) The Lender shall have received:

(i)           certified true copies of the Borrower's statutory/constitutional documents

(certificate of incorporation, memorandum and articles of association, excerpt from commercial register, etc.);

(ii)           this letter duly executed by the Borrower together with a certified copy of

the board resolution resolving or approving the acceptance of the Facilities and the provision of any collateral/security as required in Clause 7 (Collateral/Security), in form and substance acceptable to the lender;

(iii)           legal opinion from counsel(s) acceptable to the lender, if required;

(iv)           all necessary approvals and registrations, which may be required- in

connection with the Facilities to be granted thereunder, have been obtained from Hong Kong and PRC governmental authorities, including SAFE and any other governmental authorities, in form satisfactory to the Lender.

(b) All security / legal documentation mentioned in Clause 7 (Collateral/Security) duly executed and properly registered if required.

(c) Opening of respective account with the Bank.

(d) A list from the Borrower confirming its existing current account list, bank facilities and respective current outstanding and outstanding corporate guarantees issued for any third party as of the date of the Letter.

(e) Not later than 3 business days prior to the issuance of any L/C, the lender shall have received;

(i)           a duly completed application to issue an L/C in form and substance

acceptable to the lender;

- 4 -

Armco & Metawise / No. 2009032508059000

(ii)           copy of purchase contract between the Borrower and the Supplier in form

and substance acceptable to the Lender;

(iii) copy of sales contract between the Borrower and the Off-taker in form and substance acceptable to the Lender;

(iv)           marine insurance cover note or policy, in form and substance acceptable to

the Lender, to be endorsed to order of the Lender or to show the Lender as loss payee, and satisfactory evidence for payment of the premium, as and when required;

(v)           pre-signed blank bills of exchange, invoices and pocking lists and any other

necessary documents the Lender may request from time to time;

(vi)           the Master L/C, which is to be advised through and deposited with the Lender

and, if required, confirmed by a bank specified by the Lender;

(f) For Export L/C Financing, the lender shall have received:

(i)           a written request from the Borrower for Export L/C Financing in form and

substance acceptable to the Lender;

(ii)           copy of purchase contract between the Borrower and the Supplier in form

and substance acceptable to the Lender;

(iii)           copy of sales contract between the Borrower and the Off-taker in form and

substance acceptable to the lender;.

(iv)           the Export L/C, which is to be advised through and deposited with the

Lender and, if required, confirmed by a bank stipulated by the Lender.

10. Warranties and Undertakings:

(a) All payments due to be made by the Borrower under this Letter shall be made not later than 11:00 a.m. on the relevant day by effecting payments to the Borrower's account held with the Bank;

(b) The Borrower shall deliver to the Lender such documents of title, which are being financed in connection with the relevant L/C and contain' such endorsement satisfactory to the Lender in all respects. Any bill of lading shall be in full set and made out to the order of the Lender or to order and blank endorsed;

(c) The Lender shall have the sole discretion to accept or reject terms or conditions of any of the L/C  to be issued;

(d) The beneficiary of the L/C shall inform the Lender of full shipping details as well as the Expected Time of Arrival ("ETA”) of the vessel at least seven (7) days before arrival of goods;

(e) The lender shall have the absolute discretion to apply any proceeds arising out of Master L/C Financing, Export L/C Financing and/or sale of the Goods to settle the corresponding import obligations and/or indebtedness owned by the Borrower to the lender when due;

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Armco & Metawise / No. 2009032508059000

(f) All payments in connection with the Facilities shall be routed through the Borrower's account held with the Bank;

(g) Any Master L/C  issued by a bank on behalf of Henan Armco and Metawise Trading Co., limited is not acceptable to the lender;

(h) There does not exist any encumbrances, mortgage, lien, pledge on any of the Borrower's assets, both present and future undisclosed and/ or unacceptable by the lender and the Borrower must not create or permit to exist any mortgage, pledge, lien, charge, assignment, or hypothecation or security interest or any other agreement or arrangement having the effect of conferring security over any of the Borrower's assets without the lender's prior written consent;

(i) The Borrower must procure that all their obligations in relation to the Facilities will at all times rank pari passu in terms of security and support (including third party) with all their other present and future obligations, except for the obligations mandatorily preferred by law applying to companies generally;

(j) The Borrower shall furnish to the lender within 60 days after the end of half year a copy of their interim financial statements and 120 days after the end of each financial year a copy of its annual audited financial statements;

(k) The Borrower shall furnish to the lender such other information concerning the Borrower's business, properties, condition or operations, financial or otherwise, as the lender may from time to time reasonably request;

(l) The Borrower shall promptly inform the lender if there is any material adverse change of its operations or financial position;

(m) The Borrower shall promptly inform the lender if any termination event or event of default has occurred or is likely to occur under any agreement with the lender or other creditors;

(n) Notwithstanding any provisions stated in this letter, the Facilities are repayable on demand by the lender. The lender may at any time by written notice to the Borrower immediately terminate, cancel or suspend the Facilities or otherwise modify the Facilities without the consent of any party. The Borrower shall upon notice pay to the lender immediately available funds with an amount equal to the aggregate of its liabilities (both adual and contingent and whether or not matured) which sum shall be credited forthwith to an escrow account with the Bank to be applied at the lender's sole absolute discretion towards the settlement and discharge of its liabilities and obligations on any account;

- 6 -

Armco & Metawise / No. 2009032508059000

(o) Notwithstanding any provision in the letter, the lender has absolute discretion to sell the Goods by auction or otherwise, at prevailing market price or invoice value to any buyer without having to seek prior consent or agreement from the Borrower. Any sum of money recovered from the sale of Goods shall be applied at the lender's discretion towards the settlement and discharge of liabilities or obligations of the Borrower on any account. All fees, charges, commissions, and/or expenses incurred in or in connection with the sale of the Goods shall be borne by the Borrower;

(p) If this letter is addressed to more than one Borrower, each Borrower accepting the terms and conditions set out in this Letter is jointly and severally liable with the other Borrowers accepting the same. Each Borrower is liable for all obligations of any other Borrower outstanding under the Letter. The obligations and liabilities of each Borrower shall take effect immediately upon its acceptance of the terms and conditions set out or referred to in this Letter. Each Borrower further agrees that the lender is not required to give any notice or make any reference to the other Borrower(s) in relation to the utilization of the Facilities by any Borrower(s);

(q) If this letter is addressed to the Borrower and its subsidiaries, the Borrower, as a primary debtor, is liable to the Lender for all sums payable or owing under the Facilities (whether incurred by the Borrower or its subsidiaries).

11. Default Interest Rates:

Should any payment due to the Lender under the Facilities be outstanding and remain unpaid, default interest shall be charged at the rate of 3% per annum over and above the interest rate determined pursuant to Clause 3 from due date to date of actual payment.

12. Protection:

The Borrower shall take, at its expense, such actions as the Lender thinks fit to perfect, protect or realize the security granted to the lender under the Facilities, whether by registration with any relevant authority, by the giving of notice to the issuer of any Master L/C, Export L/C or other person or by any other means whatsoever.

13. Review:

Notwithstanding the terms herein and in conformity with normal practice, the Lender reserves the right to modify, reduce or cancel the Facilities or any of the terms and conditions herein or any other documents or security relating hereto at the lender's sole discretion and without prior notice.

14. Costs:

All costs (including break-funding cost), legal costs, charges and out-of-pocket expenses in connection with the preparation and execution of the Facilities, perfection of any security documents required hereunder and the protecting and enforcing the rights of the Lender, will be borne by the Borrower on a full indemnity basis.

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Armco & Metawise / No. 2009032508059000

15. General Agreement for Commercial Business:

The Facilities are also governed by General Business Terms and Conditions, to be executed by the Borrower upon the acceptance of this letter. In case of conflict, terms of this letter shall prevail to the extent of conflict.

16. Utilization:

By accepting the Facilities, the Borrower agrees that the Facilities can be used by the Borrower only. Utilization of the Facilities by the Borrower is subject to the terms and conditions set out in this letter.

17. Assignment:

The Borrower may not assign or transfer any of its rights under this Letter without the prior written consent of the Lender.

The Lender may assign and transfer its rights and obligations under the Facilities or any part thereof and for this purpose may disclose to a potential assignee or transferee such information about the Borrower, the Guarantor, and the Facilities as the lender may absolutely think fit.

18. Governing Law:

This Letter shall be governed by and construed in accordance with the Laws of the Hong Kong SAR.

19. Arbitration:

In the event that the lender chooses to settle any dispute amicably by negotiation, an agreement has to be reached within 30 days after a written notice on the existence of the dispute has been given. Otherwise it shall be referred to and finally settled by arbitration under the Rules of the Hong Kong International Arbitration Centre. The tribunal shall consist of one arbitrator who shall, in the absence of agreement of the parties, be appointed by the Hong Kong International Arbitration Centre. The place of arbitration shall be Hong Kong and the language to be used shall be English. The costs of arbitration, including reasonable attorneys’ fees, shall be borne by the losing party.

20. Notice:

Except as otherwise provided in this Letter, all requests, notices or other communications between the parties, shall be in writing and either delivered personally or by registered post or facsimile, addressed to the other party at the following address or other address as notified by such other party:

- 8 -

Armco & Metawise / No. 2009032508059000

To the Borrower:                                                      Armco & Metawise (H.K) Limited

Room 1706, Building 1, No 66 Jingsan Road,

Jinshui District, Zhengzhou City, Henan Province,

P.R. China, 450008

Attention:                      Wang Chunxiang

Telephone:                      0371-65862751

Facsimile:                      0371-65861170

To the lender:                                                                RZB Austria Finance (Hong Kong) Limited

Unit 2106-08, 21/F., Tower 1, Lippo Centre,

89 Queensway, Hong Kong

Attention:                      Mr. Edmond Wong / Mr. Johnny Wong

Telephone:                      852 - 28696610

Facsimile:                      852 - 27306028

Notice is effective, if hand delivered, upon delivery, if sent by mail, seven (7) business days after posting, if by facsimile, when sent.

21. General:

The Borrower should kindly confirm its acceptance of all the terms and conditions by signing and affixing the Company's stamp on the duplicate of this letter and returning it to the Lender together with the board resolution within 14 days from the date of this Letter.

This letter when accepted supersedes all previous letters, correspondence, discussions and/or meetings relating to offer and terms and conditions of finance facilities.

Should anyone of the provisions of this Letter be or become invalid, this shall not affect the validity of the other provisions hereof. Any invalid provision is to be replaced by a valid provision which comes as close as legally possible to the invalid one taking into account the economic interest of the parties.

Yours faithfully,

RZB Austria Finance(Hong Kong) Limited

For and on behalf of

RZB Austria Finance(Hong Kong) Limited

/s/__________________________________

(Authorized Signatories and Company Stamp)

- 9 -

Armco & Metawise / No. 2009032508059000

Accepted and Agreed for a on behalf of

Armco Metawise (H.K) Limited

/s/ Kexuan Yao__________________________________

(Authorized Signatories and Company Stamp)

Acknowledged by the Guarantor:

/s/ Kexuan Yao

Yao Kexuan

EX-10.17

[Translated from Chinese to English]

Loan Review Committee of Guangdong Development Bank Zhengzhou Branch (2009 International Trading) #003

Line of Credit Review Approval Notice

International Business Department:

The line of credit application from Henan Armco & Metawise Trading Co., Ltd. has been received. After the third group review, the reply is as follows:

1.   (Approved) One-year line of credit for international trading is approved for RMB 50 million, exclusively financing the imports of minerals. The line for import letter of credit is RMB 50 million with percentage of guarantee money not lower than 20%, and the bank has the control of cargo; the line for import bill advance (including bill advances under letter of credit and import collection) shall not be higher than RMB50 million and the term for a single bill advance plus usance letter of credit shall not be longer than 4 months; the applied interest rate shall be subject to the head office of the bank; the bank has the control of cargo. The applicant shall pay to take cargo, and the legal person of the applicant, Mr. Kexuan Yao, shall take joint liabilities for warrandice.  It is requir ed: (1) The letter of credit opened by the applicant shall have the bank as the designated recipient of cargo (except for the shipping document with blank headings); (2) The applicant shall purchased insurance policies for the transportation and storage of the cargo covered by this line of credit, with the bank as the immediate beneficiary; (3) The forwarder qualifications and warehouse safety shall be strictly reviewed and the forwarding procedures and storage status shall be under close watch in order to ensure the bank’s control of cargo and goods safety; (4) The International Business Department shall closely watch the goods categories, recent price fluctuation, and market demand during the opening of letter of credit, and increase percentage of guarantee money if needed to mitigate risk that the bank is exposed to.

2.   (Not applied) the application is rejected.

3.   (Approved) Miscellaneous:   Approval Number: 20090318

4.   (Approved) Chief Leader: Chaofeng Kang

Seal

(Loan Review Committee of Guangdong Development Bank Zhengzhou Branch)

Date: 10-21-2010

Note: The applicant shall complete the procedure as stipulated above and get the Charge-Off Notice from the Loan Management Department of Zhengzhou Branch before it can record the expenditure to the account. If the applicant has not charged off within 90 days from the delivery date of this notice, the line of credit will automatically expire.

EX-10.18

General Agreement Relating To Commercial Credits

To: ING Bank N.V.

Hong Kong Branch

In consideration of your agreeing at our request to open or issue or establish from time to time such commercial or documentary credits (hereinafter referred to as "the Credit") on such terms and conditions as you may think fit, I/we, the undersigned, hereby jointly and severally agree as follows:

1.           I/we hereby authorize you to accept and/or pay for my/our account or accounts all drafts drawn or purporting to be drawn under any of the Credit no matter on whom the same may be drawn and I/we agree to accept and/or pay at maturity all drafts drawn or purporting to be drawn in accordance with the terms of the Credit no matter on whom the same may be drawn.

2.           As to drafts drawn or acceptances accepted under or purporting to be drawn or accepted under the Credit, which are payable in Hong Kong Dollars, I/we agree:-

(a) in the case of each sight draft, to reimburse you at your office, on demand, in legal tender of Hongkong, the amount paid on such drafts, or, if so demanded by you, to pay you at your office in advance in legal tender of Hongkong the amount required to pay such draft; and

(b) in the case of each acceptance, to pay to you at your office, in legal tender of Hongkong, the amount thereof, on demand but in any event not later than the date of maturity.

3.           As to drafts drawn or acceptances accepted under or purporting to be drawn or accepted under the Credit which are payable in currency other than Hong Kong Dollars we agree:

(a) in the case of sight draft to reimburse you at your Hong Kong office on demand, the equivalent of the amount paid, in legal tender of Hong Kong at your rate of exchange prevailing at the time of payment in Hong Kong for cable transfers to the place of payment in the currency in which such draft is drawn, with interest from the date of payment of the instrument, or if so demanded by you, to pay you, at your Hong Kong office in advance, in Hong Kong currency, the equivalent of the amount required to pay the same; and

(b) in the case of each acceptance, to pay you at your Hong Kong office, on demand, the equivalent of the acceptance in the legal tender of Hong Kong at your rate of exchange prevailing at the time of acceptance for demand drafts in the place of payment, if payment is made by us in time to reach the place of payment in the course of the mails not later than the date of maturity, or at your rate of exchange prevailing in Hong Kong for cable transfers at time of transmission to the place of payment in the currency in which the acceptance is payable, if such payment is made at your office on the maturity date. If, for any cause whatsoever, at the time in question you do not quote and/or provide any rate of exchange generally prevailing in Hong Kong for effective cable transfers of the sort abo ve provided for, I/we agree to pay you on demand an amount in Hong Kong Dollars equivalent to the actual cost of settlement of your obligation to the payor of the draft or acceptance or any holder thereof, as the case may be, and however and whenever such settlement may be made by you, including interest on the amount of moneys payable by us from the date of payment of such draft or acceptance to the date of our payment to you at the rate customarily charged by you in like circumstance.

4.           In the event that any Hong Kong dollar drafts are drawn by me/us on you in order to refinance any obligation set forth in the preceding clauses, and such drafts, at your option, are accepted by you I/we agree to pay you on demand, but in any event not later than the maturity date the amount of each such acceptance. Each amount which may become due and payable to you under this Agreement may, in your sole and absolute discretion but without prejudice to your rights and remedies herein and if not otherwise paid, be set off by you against any available funds then held by you for any of my/our accounts of whatsoever nature.

5.           I/we hereby authorize you to debit any and/or all of my/our accounts of whatsoever nature with you with all moneys or any part or parts thereof including stamp duty in transit interest and such other taxes or charges as may be applicable in each and every case for which you may be or become liable to pay under or by virtue of the Credit opened, issued or established pursuant to this Agreement at such time or times as your liability in respect thereof shall be incurred whether or not prior to receipt by you of advice of payment or, in your sole and absolute discretion at any time thereafter and I/we confirm that you shall not be under any duty and/or obligation to give us notice of such debit either before or after the same is/are made by you.

6.           I/we agree to pay you on demand, with respect to the Credit, a commission at such rate as you may in your sole and absolute discretion determine and any and all charges and expenses which may be paid or incurred by you in connection with the Credit, together with interest where chargeable. Interest payable hereunder shall be at the rate customarily charged by you at the time in like circumstances.

7.           As security for all of my/our obligations and liabilities to you, I/we hereby recognize and admit your security interest in and hereby pledge and charge to you all property shipped under or pursuant to or in connection with the Credit or in any way relative thereto or to the drafts drawn thereunder, whether or not released to me/us or to my/our agents on security agreements, and also in and to all shipping documents, warehouse receipts, policies or certificates of insurance and other documents accompanying or relative to drafts drawn under or in connection with the Credit, and in and to the proceeds of each and all of the foregoing, until such time as all the obligations and liabilities of me/us or any of us to you at any time existing under or with reference to the Credi t or this Agreement, or any other obligation or liability to you have been fully paid and discharged; and that all or any or such property and documents, and the proce.eds thereof, coming into your possession or that of any of your correspondents, may be held and disposed of as hereinafter provided. I/We agree to execute such financing statements and other writings as shall be necessary to perfect and maintain your security interest in all the said properties and to pay all costs of filing financing, continuation and termination statements with respect to your security interest hereunder. The receipt by you or any of your correspondents at any time of other security of whatsoever nature, including cash, shall not be deemed a waiver of any of your rights or powers herein recognized.

8.           In the absence of written instructions expressly to the contrary, I/we agree that you or any of your correspondents may receive and accept as "bills of lading" under the Credit, any document issued or purporting to be issued by or on behalf of any carrier, which acknowledges receipt of property for transportation, whatever the other specific provisions of such document(s), and that the date of each such document shall be regarded as the date of shipment of the property mentioned therein. Unless otherwise specifically agreed in writing partial shipments may be made and you may honour the relative drafts, my/our liability to reimburse you for payments made or obligations incurred on such drafts being limited to the amount of the Credit.

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You and any of your correspondents may receive and accept as documents of insurance under the Credit either insurance policies or insurance certificates which need not be for an amount of insurance greater than the amount paid by you under or relative to the Credit. You and any of your correspondents may receive, accept, or pay as complying with the terms of the Credit, any drafts or other documents otherwise in order, which may be signed by, or issued to, the administrator or executor of, or the trustee in bankruptcy or the receiver for the property of the party in whose name it is provided in the Credit that any drafts or other documents should be drawn or issued.

9. (a) If at my/our special request the Credit is issued in transferable from, it is understood and agreed that you are under no duty to determent the proper identity of any one appearing in the draft or documents as transferee, not shall you be charged with responsibility of any nature or character for the validity or correctness of any transfer or successive transfers, and payment by you to any purported transferee as determined by you us hereby authorized and approved, and I/we further agree to hold you harmless and indemnified in full against any liability or claim in connection with or arising out of the foregoing.

(b)                If It is a condition of the Credit that payment may be made upon receipt by you of a cable advising negotiation, I/we hereby agree to reimburse you on demand for the amount indicated in the said cable advice, and further agree to hold you harmless if the documents fail to arrive, or when, as and if documents arrive it should transpire that the terms of the Credit have not been complied with, and that the documents not in order.

10.          I/we agree that in the event of any extension of the maturity ortime for presentation of drafts, acceptances, or documents, or any other modification other terms of the Credit, at the request of me or any of us, with or without notification to the others, or in the event of any increase in the amount of the Credit at my/our request, this Agreement shall be binding upon me/us with regards to the Credit so increased or otherwise modified, to drafts, documents, and property covered thereby, and to any action taken by you or any of your correspondent and/or agents in accordance with such extension, or other modification.

11.          The user of the Credit shall be deemed my/our agents and neither you nor your correspondents and/or agents shall be responsible for any and/or all of the following:

(a)        the use which may be made of the Credit or for any acts or omissions of the users of the Credit;

(b)        the existence of the property purported to be represented by documents;

(c)        any difference in character, quality, quantity, condition, or value of the property and that purporting to be represented by documents;

(d)        the validity, sufficiency, or genuineness of documents, even if such documents should in fact prove to be in any or all respects invalid, fraudulent, or forged;

(e)        particular conditions stipulated in the documents or superimposed thereon;

(f)         the time, place, manner or order in which shipment is made;

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(g)        partial or incomplete shipment, or failure or omission to ship any and all of the property referred to in the Credit;

(h)        the character, adequacy, validity, or genuineness of any insurance, the solvency or responsibility of any insurer, or any other risk connected with insurance;

(i)        any deviation from instruction, delay, default, or fraud by the shipper or anyone else in connection with the property or the shipping thereof;

(j)        the solvency, responsibility, or relationship to the property of any party issuing any documents in connection with the property;

(k)        delay in arrival or failure to arrive of either the property or any of the documents relating thereto;

(l)        delay in giving or failure to give notice of arrival or any other notice;

(m)        any breach of contract between the shippers or vendors and ourselves or any of us;

(n)        failure of any Instrument to bear any reference or adequate reference to the Credit, or failure of documents to accompany any draft at negotiation, or failure of any person to note the amount of any draft on the reverse of the Credit or to surrender or take up the Credit or to send forward documents apart from draft as required by the terms of the Credit, each of which provisions, if contained in the Credit itself, it is agreed may be waived by you;

(o)        errors, omissions, interruptions, or delay in transmissions, or delivery of any message by mail, cable, telegraph wireless or otherwise, whether or not they may be in cipher.

You shall not be responsible for any act, error, neglect, or default, omission, insolvency or failure in the business of any of your correspondent or agent, or for any refusal by you or any of your correspondents and/or agents to pay or honour drafts drawn under the Credit because of any applicable law, decree or edict, legal or illegal, of any governmental agency now or hereafter in force or for any matter beyond your control notwithstanding that you may have taken the initiative to choose your correspondent/agent. The happening of any one or more of the contingencies referred to in the in preceding sub-clause of this clause shall not affect, impair, or prevent, the vesting of any of your rights or powers hereunder, or my/our obligation to make reimbursement. In furtherance and extension and not in limitation of the specific provi sions hereinabove set forth, I/we agree that any action taken by you or by any correspondent of yours under or in connection with the Credit or the relative drafts, documents, or property, if taken in good faith, shall be binding, on me/us and shall not put you or any of your correspondents under any resulting liability to me/us and I/we make like agreements as to any inaction or omission unless in breach of good faith.

12.          If it is a condition of the Credit that the accreditees are authorized to draw clean drafts, you are authorized end instructed to accept and pay drafts without requiring, and without responsibility for, the delivery of shipping documents, ether at the time of acceptance or of payment or thereafter.

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13.          I/we agree to procure promptly any necessary import and export or other licenses for the import, export, or shipping of the property and to comply with all foreign and domestic government regulations in regards to the shipment of the property or the financing thereof and to furnish such certificates in that respect as you may at any time require, to keep the property relating to the Credit covered with insurance at all times against marine and fire risks end any other risk(s) as required by you in insurance companies acceptable and satisfactory to you and you may cause to cover with insurance, whether additional or otherwise, any and/or ell risks at any time at your sole and absolute discretion and at my/our expense any and all of the property without my/our further conse nt even though I/we have caused the merchandise to be insured against the same or similar risks. I/we further agree to assign the insurance policies or certificates to you or to make the loss or adjustment payable to you at your option. It is further understood that you will not be responsible for any act or omission on the part of any insurance company and if any insurance company fails to pay I/we will still be responsible to you for the payment of the Credit. It is further understood that if you or the undersigned or anyone else fail to cause to insure the merchandise and if any loss or damage either partial or total occurs I/we will still be responsible for the payment of the Credit.

14 (a) In the event you deliver to me/us, or to any of us, or to my/our agent at my/our request any of the document of title pledged hereunder prier to having received payment in full of all of my/our liabilities to you, I/we agree to obtain possession of any goods represented by documents within twenty-one days from the date of such delivery or said documents and If I/we should fail to do so, I/we agree to return the said documents or to have them returned by my/our agent to you prior to the expiration of the said twenty-one day period. I/we agree to execute for such documents and the goods represented thereby Identifying and describing such documents and goods, which said receipts shall constitute a part of this Agreement.

(b)          So long as the goods are in my/our possession or under my/our control, I/we acknowledge that you will remain the owner thereof and that such goods are open to inspection at all times by you, or if you think fit to retake possession of them without reference to us. I/we undertake that the goods shall not be hypothecated to any person and should such goods be delivered to purchasers and proceeds received therefor I/we engage to keep the money for you apart from all other money which may be in my/our hands.

15.           I and each of us agree at all time and from time to time, on demand, to deliver, convey, transfer, or assigned to you, as security for any and all of my/our obligations and liabilities, contingent or absolute, due at to become due, which are now or at any time hereafter owing by me or us to you, additional security of a character and value satisfactory to you, or to make such payment as you may require. I and each of us agree that all property belonging to me, or us, in which I or we may have an interest, of any name and nature whatsoever, now or at any time hereafter delivered, conveyed, transferred, assigned, or paid to you, or coming into your possession in any manner whatsoever, whether expressly as security for any of the obligations or liabilities of me or us to you or for safekeeping or otherwise, including any items received for collection or transmission and the proceeds thereof, whether or not such property is in whole or part released to us on security agreement, are hereby charged, pledged and made security for each and all such obligations and liabilities.

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16.           I and each of us agree that upon my/our failure at any time to keep a margin of security with you satisfactory to you. or upon the making by me/us of any assignment for the benefit of creditors, or upon the filling of any voluntary or involuntary petition in bankruptcy/ winding-up by or against me/us, or upon the application for the appointment of a receiver of any of my/our property or upon any act of insolvency of me/us, all of such obligations and liabilities shall become and be immediately due and payable without demand or notice, notwithstanding any credit or time allowed to me or us, or any instrument evidence any such obligations or liabilities or otherwise. I and each of us as to property in which I and each of us may have any Interest, and all of us, as to property in which we, whether jointly or severally, may have any Interest, expressly authorize you in any such event, or upon my/our failure to pay any of ouch obligation or liabilities when it or they shall become or be made due, to sell immediately without demand for payment, without advertisement and without notice to us or any of us, all of which are hereby expressly waived, any and all such property arrived or to arrive at private sale or at public auction or at broker's board or otherwise, at your option, in such parcel or parcels and at such time or times and at such place or places and for such price or prices and upon such terms and conditions as you may deem proper, and to apply the net proceeds of such sale or sales together with any balance of deposits and any sums credited by or due from you to me or us or any of us in general account or otherwise, to the payment of any and all of such obligations or liabilities to you however arising. If any such sale be at broker’s board or at public au ction, you may yourself be a purchaser at such sale, free from any right of redemption which I/we hereby expressly waive and release. O/we undertake to pay you on demand the amount of any deficiency remaining after such sale together with all usual commission, charges and expenses and interest at such prevailing rate or rates as you may from time to time charge your customers for unsecured banking facilities.

17.           The rights and liens which you posses hereunder shall continue unimpaired, and I/we and each of us shall remain obligated in accordance with the terms and provisions hereof, notwithstanding the release or substitution of any properties which may be held as security hereunder at any time, or of any right or interest therein. No delay, extension of time, renewal, compromise, or other indulgence which may occur, shall impair your rights or powers hereunder. You shall not be deemed to have waived any of your rights hereunder unless you or your authorized agent shall have signed such waiver in writing. No such waiver, unless expressly as stated therein, shall be effective as to any transaction which occurs subsequent to the date of such waiver, nor as to any continuance of a breach after such waiver.

18.           Except as otherwise expressly provided in this Agreement or as you and I/we may otherwise expressly agree with regard to, and prior to your Issuance of the Credit, the “Uniform Customs and Practice for Documentary Credits (1998 Revision), international Chamber of Commerce Publication No. 500” (or any modification or amendment thereof for the time being in force) shall be binding on the Credit and shall serve, in the absence of proof expressly to the contrary, as evidence of general banking usage.

19.           Without prejudice and in addition to and without limiting the generality of the foregoing:-

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(a)           All bills and documents of title and the goods thereby represented and insurance policies or certificates in connection with any of the Credit shall be held by you under general lien, and shall additionally and specially be charged and/ or (as the case may be) pledged to you as continuing security for the payment of all advance or banking accommodation whether by loan or overdraft and whether for the retirement of any draft or otherwise and of all my/our liabilities to you in connection herewith;

(b)           I/we agree to assign to you my/our rights as unpaid sellers and to transfer into your control any goods represented by the documents received by you or your correspondents and/or agents under any of the Credit and that until payment by me/us of such moneys due to you the proceeds of the sale of the goods represented by the said documents are to be held as trustee for and be available to you and it received by me/us shall be paid to you forth-with and until so paid shall be held by me/us on your behalf;

(c)           l/we agree that the rights and powers conferred upon you by this agreement are in addition and without prejudice to any other securities which you may now or hereafter hold for my/our account and this Agreement shall continue in force and be applicable to all transactions notwithstanding any change in the status or constitution of either your bank or our company or the individuals composing our firm (as the case may be) or otherwise;

(d)           you may restrict negotiations under any or the Credit to your own offices or to any correspondent of your choice;

(e)           this Agreement shall be without prejudice to such further or other terms and conditions that may be agreed upon in respect of any Individual documentary or commercial credit that you may open or establish at my/our request or Instruction;

(f)           for the purpose of any of the Credit, the date of any bill of lading shall, in your favour, be deemed to be conclusive as of the date of shipment and the absence in any bill of lading of any positive evidence of trans-shipment shall, in your favour, be conclusive that trans-shipment has not taken place;

(g)           that on no account shall any claim be made against you after the draft drawn or acceptance accepted under the Credit has been accepted or paid by me/us.

20.           All the Credits shall be opened entirely at my/our own risk and I/we will honour an drafts presented thereunder and repay you when due with interest: even though the goods should not arrive or be refused landing through any act of war or restriction imposed under or by virtue of any law or regulation or order of any local or foreign government or for any other reason whatsoever. Without prejudice to the generality of the foregoing I/we further agree that It I/we put up margin or cash deposit or securities in foreign currency for your opening or establishing any of the Credit on my/our behalf or for my/our account you will nevertheless be entitled to surrender block or withhold such moneys or securities should you be requested to do so by any local or foreign govern ment without requiring my/our consent, and in such case such moneys or securities will not be used to discharge any of my/our liabilities or indebtness due to you on any account and we shall forthwith pay you all the moneys due to you as if no such deposit or securities has been put up by me/us with you or your correspondents and/or agents.

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21.           The word ''property'' as used herein Includes goods and merchandise, as well as any and all documents relative thereto, also securities, funds, choses in action, and any and all other forms of property, whether real, personal or mixed and any rights or interest therein.

22.           This Agreement shall be binding upon me/us, my/ours heirs, executors, administrators, successors, and assigns and shall inure to the benefit of, and be enforceable by you, your successors, transferees, and assigns. If this Agreement should be terminated or revoked as to me/us by operation of law, I/we will indemnify and save you harmless from any loss which may be incurred by you in acting hereunder prior to the receipt by you or your successors, transferees, or assigns of notice in writing of such termination or revocation. If this agreement is signed by one individual including a corporation/company, the terms “we”, “our”, “us” shall be read throughout as “I”, “my”, “me”, as the case may be, i f this Agreement is signed by two or more parties, it shall be the joint and several agreement obligation and liability of such parties; and in any such case, this Agreement shall not be revoked or impaired as to anyone or more of such parties by the death of any of the others or by the revocation or release of any obligations hereunder of anyone or more of such parties.

23. This Agreement and all rights, obligations, and liabilities arising shall be construed in accordance with the laws of Hong Kong and I/we hereby irrevocably submit to the non-exclusive Jurisdiction of the Hong Kong Courts.

24. In this Agreement, unless the contrary intention appears, words importing the masculine gender shall include females and corporations and vice versa and words in singular shall include plural and vice versa.

Dated 8 Dec 2009

SIGNED BY

in the presence of:-

Armco & Metawise (HK) Ltd.

 *SIGNED BY

Yao Kexuan  /s/ Yao Kexuan

for and on behalf of

Armco & Metawise (HK) Ltd

in the presence of:-

Chu Yi  /s/ Chu Yi

*N.B. If executed by a limited company, an extract of a certified copy of the resolution of the Board of Directors of the company approving the execution of this Agreement (as printed below) must be completed.

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Attachment: Ing Bank Agreement

Borrower	Armco & Metawise (HK) Ltd
Lender:	ING Bank N.V.
Purpose	Iron are, Chrome ore, Manganese ore, and Nickel ore trading
Facility type/ limit	USD15 mio ad hoc BBLC opening against export LC.
BBLC Drawdown Conditions: (Not later than 3 business date prior to the issuance of LC)	a.          A duly completed application to issue an LC in form and substance acceptable to Lender;
	b.          Copy of purchase contract between the Borrower and the Suppler in formand substance acceptable to the Lender;
	c.          Copy of sales contract between the Borrower and the Buyer in form and substance acceptable to the Lender;
	d.          BBLC to call for full set BL "issued to order of the Bank" or " to order and blank endorsed"
	8.          The relevant export LC with terms acceptable to the Bank
Collateral:	1) Personal guarantee from Mr. Yao.
	2) Corporate guarantee from China Armco Metals Inc.
	3) Assignment of relevant sale proceeds under export LC.
	4) 5% cash margin.
Pricing	LC opening comm./ comm. In lieu:
	1/4% on 1st USD50K; 1/16% on balance
	Loan spread @ 250bp over COF
Acceptable master LC opening Chinese bank	China Development Bank
	The Export-Import Bank of China
	Bank of China Ltd
	The Industrial & Commercial Bank of China Ltd
	China Construction Bank Ltd
	Agricultural Bank of China

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Bank of Communications Co Ltd

China Merchants Bank

Shanghai Pudong Development Bank Co Ltd

China Citic Bank

Bank of Beijing

China Minsheng Banking Corp Ltd

Industrial Bank Co Ltd

Hua Xia Bank

Bank of Shanghai

China Everbright Bank

Guangdong Development Bank

Shenzhen Ping An Bank

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ING

WHOLESALE BANKING

ING BANK N.V. Hong Kong Branch

GENERAL TERMS AND CONDITIONS

To:           ING Bank N.V., Hong Kong Branch (the "Bank")

1.           Introduction

1.1           The relationship between the Bank and me/us is basically that of debtor and creditor. However, other relationships may arise, such as bailor and bailee when items are held in safe custody, according to the banking services provided by the Bank.

1.2           These terms and conditions form part of the account opening application I/we have signed and apply to all my/our accounts with the Bank.

1.3           In addition, each facility or service may be subject to new or additional terms or supplemented or governed by other specific or general descriptive information concerning matters such as fees and charges, my/our identification requirements, operation of the accounts (for individuals (single or joint) or limited companies), rights of set off, interest rates, deposit accounts, time deposits and other payment services, which may be available upon request from the Bank or publicised or displayed in the Bank's premises, as the Bank considers appropriate.

2.           Facilities and Services

2.1           Subject to prior arrangement, the Bank may provide a range of services, including, without limitation, chequeing, deposit, investment, and other banking facility to me/us.

2.2           Investments may include deposits and investments of any nature including, those in or linked to deposits, securities, funds, unit trusts, bonds, bearer certificate of deposits, money market instruments, foreign exchange, interest rate, commodities, financial futures, commodity index or any other index, indicator, or spot, forward margin, option, swap, netting or derivative arrangements or contracts for differences.

2.3           Deposits may include deposits with the Bank in Hong Kong, or placed by the Bank with the Bank's branch or any of the Bank's subsidiaries, affiliated companies or any subsidiary or affiliated company of the Bank's holding company, in each case, outside Hong Kong.

2.4           Either the Bank or me/us may, upon giving reasonable notice, close any account without assigning any reason therefor. Without prejudice to the above, an account may be closed by the Bank with reasonable prior notice. The Bank may, from time to time, fix the minimum and/or maximum amount or value for any transaction to be conducted by me/us.

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2.5           In addition to the above, the Bank may close any account without giving notice to me/us in exceptional circumstances (including, without limitation, if the Bank believes that the account is being used for criminal activities) and also notwithstanding that the same is in credit.

2.6           In relation to any account closed by the Bank, 'the Bank shall be released from any further obligations to me/us in respect of such account, and may refuse payment of any instrument drawn by me/us and presented after the date such account was closed by the Bank without liability to the Bank. I/We may collect the balance standing to the credit of such account, if any, from the Bank during the Bank's normal business hours; alternatively, at the Bank's option, the balance may be sent by way of a cashier's order, or other payment instruments by post to my/our last known address(es).

3.           The Bank's Role

3.1           My/Our deposits and investments may be located in or outside Hong Kong. Any deposits with or other investment obligations of the Bank's branch or any other branch in any particular jurisdiction will be paid at that branch and are subject to the laws and practices of that jurisdiction (including government acts, regulations and/or orders). Neither the Bank's head office, nor any other branch, subsidiary or affiliate shall be responsible for payment of those deposits and obligations if the relevant branch is prevented from fulfilling its obligations due to restrictions (including force majeure) or events beyond the control of that branch. Restrictions shall not include restrictions on payment directly due to liquidation or i nsolvency of the relevant branch.

3.2           Whenever any deposit or other investment is placed or made by the Bank on my/our behalf, I/we agree that the Bank acts as my/our agent for my/our sole risk and account. For any transaction with or through any broker or counterpart, I/we appreciate that the Bank's agreement with him may expressly provide that as against him the Bank acts as principal or that the Bank's rights and obligations are not transferable. However, such provisions will not affect the Bank's capacity as my/our agent in my/our transaction with the Bank. I/We hereby agree that the relevant transaction with each broker or counterpart will be subject to the rules, terms and conditions as stipulated by him.

3.3           The Bank is a member of the Deposit Protection Scheme established under the Deposit Protection Scheme Ordinance (Cap.581) of the laws of Hong Kong (the "Scheme"). Eligible deposits taken by the Bank are protected by the Scheme up to a limit of HK$100,000 per depositor. We acknowledge that certain financial products offered by the Bank are not protected deposits under the Scheme.

4.           Instructions given by Authorised Signatories

4.1           Instructions to the Bank on the opening, operation and/or closing of any account, including any change in the manner of giving instructions, should be given by electronic means or in writing or signed by me/us or the appropriate authorised signatories appointed under my/our mandate for the operation of the relevant account or any relevant letter of authority.

4.2           Any change of authorised signatories by me/us will only be effective after the Bank has received my/our instruction (together with the relevant specimen signature(s)), accepted the same and sufficient time has elapsed enabling the Bank to fully record and implement the instruction in its records concerning the relevant account(s). Where necessary I/we shall execute such mandates or other documents as the Bank may require.

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The Bank shall be entitled to act upon such authorised signature(s) as are recorded in its records for the time being until it has received from me/us written notification of any change.

4.3           l/We shall inform the Bank immediately if I/we discover that my/our signature or the signature of any authorised signatory has or have been forged upon any bills of exchange, drafts, promissory notes, orders or other instruments for the payment of money signed, made and/or drawn upon the Bank or orders or other documents upon which the Bank is intended to act.

4.4           The Bank shall be free from all claims in respect of any account and the particulars of any transaction with respect to any account where the same is made, processed or paid out as a result of any forgery, lack of authority, negligence and/or otherwise by any person whatsoever.

5.           Receipt of Statement, Advice, Notice, etc.

5.1           Any statement, advice, confirmation, notice, communication, document or other communication given or to be given by the Bank will be validly given if dispatched to my/our address last registered with the Bank and will be deemed to have been received by me/us within a generally acceptable time for that means of communication and, in any event, by no later than 30 days after dispatch.

5.2           l/we shall notify the Bank in writing immediately of any change of address or other information previously provided to the Bank by me/us, and shall deliver to the Bank the relevant documents detailing such changes.

5.3           The Bank may send such documents to my/our address(es) last registered with the Bank. I/We agree that if I/we utilise the Bank's facility or service or if I/we do not terminate any related account within 30 days from receipt or deemed receipt by me/us, I/we will be deemed to have received and accepted the terms of such documents as binding on me/us.

6. Statement, Advice or Confirmation

6.1           A statement of account setting out debits and credits to, and balances of, each account will be issued by the Bank either monthly, or at an interval arranged in advance with, and agreed by, the Bank.

6.2           In addition to the statement of account, an advice or confirmation of any transaction concerning an account may be issued by the Bank within 2 days of that transaction.

6.3           I/We undertake to verify the correctness of each statement, advice or confirmation, and to notify the Bank within 90 days from the receipt thereof of any discrepancies, omissions, inaccuracies or incorrect entries in the account, statement, advice or confirmation as so stated, or in the particulars stated in the statement, advice or confirmation. Failure to give notice of any such error within 90 days of receipt may be considered by the Bank as an acknowledgement by me/us of the correctness of any such statement.

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6.4           The foregoing provisions of this Clause shall be binding on me/us notwithstanding that any statement, advice or confirmation may call for signed acknowledgement and return by me/us which I/we have not so provided.

6.5           The Bank may at its discretion destroy any documents relating to any account after digital archiving the same.

6.6           For all purposes, including any legal proceedings, a certificate by any of the Bank's officers as to the sums and liabilities for the time being due or incurred to the Bank by me/us shall, in the absence of manifest error, be conclusive evidence thereof against me/us.

7.           Cleared Funds

7.1           All withdrawals or investments may only be made by me/us against cleared and sufficient funds in my/our account. Any withdrawal or investment made by me/us, on the assumption that funds will be cleared, will be repaid by me/us ,if not so cleared, and I/we hereby acknowledge that the Bank reserves the right to refuse to make payment against uncleared and/or insufficient funds. All cheques or drafts will be purchased or discounted by the Bank on this basis.

7.2           No overdrafts are allowed unless by prior special arrangement with the Bank, provided that the Bank shall be entitled to pay any bills of exchange, drafts, promissory notes, orders or other instruments for the payment of money notwithstanding that such payment results in any account becoming overdrawn.

7.3           Without prejudice to the above, the Bank may debit any of my/our accounts which is overdrawn without prior special agreement with interest at the rate specified by the Bank for the time being for unauthorised overdrafts.

8.           Foreign Currency

8.1           To transfer any amount to any account or pay for any investment or my/our liabilities, or set off any credit balance in any account against my/our liabilities, denominated in a different currency, the Bank may convert any relevant sum into the appropriate currency at the Bank's applicable exchange rate.

8.2           If funds are sent to or paid in a foreign currency, the funds will be payable to the payee in the relevant foreign currency at the prevailing buying rate of the Bank's correspondent, agent or sub-agent unless the payee has made appropriate prior arrangements, acceptable to the Bank, with the Bank's correspondent, agent or sub-agent for accepting the funds in that foreign currency or other currency upon paying all their charges.

9.           Rights of Set Off and Appropriation

9.1           l/We agree that in addition to any general lien or similar right to which the Bank may be entitled at law, the Bank may, at any time without prior notice, combine or consolidate any or all of my/our accounts (wherever situate and maintained with the Bank for whatever purpose and whether subject to notice or not) with my/our liabilities to the Bank and set off or transfer any sum or sums standing to the credit of any of my/our accounts in or towards satisfaction of my/our liabilities to the Bank, whether such liabilities be primary, collateral, several, joint or in other currencies.

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Further, insofar as my/our liabilities to the Bank are contingent or future, the Bank's liability to me/us to make payment of any sum standing to the credit of any of my/our accounts shall, to the extent necessary to cover such liabilities, be suspended until the occurrence of the contingency or future event.

9.2           The Bank shall be entitled to appropriate payments made by me/us or in my/our favour for the credit of such of my/our account or accounts (including any account on which I am/we are jointly or severally or jointly and severally liable with others) or particular entries therein as the Bank in its absolute discretion thinks fit.

9.3           In respect of a joint account, the Bank shall be entitled to set off any sums standing to the credit of such joint account against the debit balance in other accounts which may be held by one or more holders of such joint account. The Bank shall inform me/us promptly after exercising any such rights of set off or transfer, as the case may be.

10.           Fees and Charges

10.1           All services (except for handling retail cash deposits in Hong Kong dollars) will be charged in accordance with the Bank's prevailing practice from time to time and a schedule of the Bank's fees is available to me/us upon request.

10.2           The Bank may debit any account with the amount of any tax, fee, stamp duty, interest, late payment charge, default interest, charge or expense payable by me/us.

10.3           The Bank may accept rebates, fees and other forms of payment from any subsidiary or affiliated company of the Bank or any third party on any transaction effected for me/us and retain the same for the Bank's benefit.

10.4           The Bank may, at any time and without my/our prior consent:

(a)           change the respective rates, amounts and periods of payment of any fee, interest, periodic minimum repayment amount, late payment charge and default interest payable by me/us; and

(b)           debit any of my/our accounts which is overdrawn without prior special agreement with interest at the rate(s) specified by the Bank for the time being for unauthorised overdrafts. Upon having charged any such sums, the Bank will promptly inform me/us of the nature and amount of such charges. The Bank will give me/us 30 days' notice before any change in fees and charges takes effect unless such changes are not within the reasonable control of the Bank.

10.5           The Bank may at its discretion alter, delete or substitute any of these terms and conditions or add new terms and conditions by giving me/us written notice as follows prior to any such variation taking effect (and such variation shall be deemed to be incorporated herein as of such date):-

(a)           30 days' notice when the variation affects fees and charges and my/our liabilities or obligations: or

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(b)           reasonable notice for all other variations. Such notice shall show the variation to these terms and conditions, the ways in which I/we may indicate refusal and the consequence of such refusal. When any variation involves substantial changes or if the changes are complicated, the Bank may provide a summary of the key features and, if the Bank deems appropriate, a consolidation of the revised terms and conditions. Where I/we refuse to accept the variation(s) and chooses to close the account within a reasonable period, the Bank will repay the annual or periodic fee, if any, on a pro rata basis.

11.           Limitation of Liability and Indemnity

I/We agree that except in the case of the gross negligence or willful misconduct of the Bank (i) the Bank will not be under any liability or responsibility and (ii) I/we will fully indemnify the Bank against any claim, loss, damage, expense and/or liability (including legal costs and costs for hedging, unwinding or similar contracts) incurred by the Bank, in each case, for taking or omitting to take any action in relation to any matter herein including:

(a)           in connection with the preservation, protection or enforcement of the Bank's rights, powers and/or remedies;

(b)           the operation of any account and/or the provision by the Bank of any investment, safekeeping or other services;

(c)           any action or omission (including any negligence or default) of any broker, agent, correspondent, custodian or counterpart involved in any transaction;

(d)           any loss or damage caused by breakdown in or delay or failure of any transmission or communication facilities or external clearing systems; or

(e)           as a result of the Bank acting on any written, verbal, telephone facsimile or e-mail instructions given by any person whom the Bank believes in good faith to be me/us or as having authority to give instructions on my/our behalf, regardless of the prevailing circumstances or the nature of the transaction and notwithstanding any error, misunderstanding, fraud, forgery or lack of clarity in the giving, receipt or contents of such instructions.

12.           Supply and Disclosure of Information

12.1           From time to time, it is necessary for me/us to supply the Bank with data in connection with the opening or continuation of accounts and the establishment or continuation of banking facilities or provision of banking services. It is also the case that data are collected from customers in the ordinary course of the continuation of the banking relationship, for example, when I/we write cheques or deposit money. I/We understand that the Bank may not be able to open or maintain any account or provide any service to me/us if I/we fail to provide any information requested by the Bank.

12.2           The purpose for which my/our data may be used are as follows:-

(a)           the daily operation of the services and credit facilities provided to customers;

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(b)           conducting credit checks;

(c)           assisting other financial institutions to conduct credit checks;

(d)           ensuring ongoing credit worthiness of customers;

(e)           designing financial services or related products for customers' use;

(f)           marketing financial services or related products;

(g)           determining the amount of indebtedness owed to or by customers;

(h)           collection of amounts outstanding from customers and those providing security for customers' obligations;

(i)           meeting the requirements to make disclosure under the requirements of any law binding on the Bank or any of its branches; and

(j)           purposes relating thereto.

Without prejudice to the foregoing, it is acknowledged that the Bank has or may outsource certain operations and processing functions to its head office or other overseas branches of the Bank and I/we accordingly consent to the use of my/our data by such parties for such purpose. I/We further acknowledge that, as a result of the aforementioned outsourcing arrangement, overseas regulatory authorities may have access to my/our data. The Bank will ensure that the recipients of client data will adhere to confidentiality undertakings in order to safeguard the confidentiality and security of my/our data at all times.

12.3           Subject as provided in these terms and conditions, the Bank shall not disclose to third persons without my/our consent (express or implied) the state of any account or any transaction with the Bank or any information relating to me/us acquired through the keeping of any account or otherwise arising during the course of the provision of any service or facility by the Bank to me/us, provided that such disclosure may be made if the Bank is compelled to do so under the provisions of any law or regulation, official directive or court order in Hong Kong or elsewhere or if the circumstances give rise to a public duty of disclosure or the Bank reasonably considers that the protection of the Bank's interests so requires disclosure .

12.4           Without prejudice to the above, I/we hereby authorise the Bank and any person who has obtained my/our personal and/or account information or records from the Bank to disclose such information to:

(a)           any agent, contractor or third party service provider who provides administrative, telecommunications, computer, payment or securities clearing or other services to the Bank in connection with the operation of its business, including, but not limited to (A) debt collection agencies, (B) computer firms to which the processing of personal information is to be, or may be, outsourced and (C) credit reference agencies;

(b)           any other branch of the Bank;

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(c)           any other person under a duty of confidentiality to the Bank including a group company of the Bank which has undertaken to keep such information confidential;

(d)           any financial institution with which the customer has or proposes to have dealings; and

(e)           any actual or proposed assignee of the Bank or participant or sub-participant or transferee of the Bank's rights in respect of the customer.

12.5           I am/We are aware of my/our rights and obligations under the Persona! Data (Privacy) Ordinance and acknowledge and agree that it is necessary for me/us to supply the Bank with personal information ("Data") in connection with the opening and/or continuation of accounts and the establishment and/or continuation of banking facilities or services. I am/We are also aware that I/we:

(a)           have the right to check whether the Bank holds data about me/us and the right of access to such data;

(b)           have the right to require the Bank to correct any data relating to me/us which is inaccurate; and

(c)           have the right to ascertain the Bank's policies and practices in relation to data and to be informed of the kind of personal data held by the Bank.

12.6           The Data will be used for considering my/our request and subject to the Bank agreeing to provide such service, the Data and details and all information relating to transactions or dealings with the Bank will be used in connection with the provision of such service to me/us. The Bank will use, store, disclose, transfer (whether within or outside Hong Kong) and/or exchange the Data, details and information to or with all such persons as the Bank may consider necessary, including without limitation the Bank and/or any of the Bank's branches or subsidiaries (whether within or outside Hong Kong) (the “ING Group") for any and all purposes in connection with such service and/or in connection with matching for whatever purpose (whether or not with a view to taking any adv erse action against me/us) the Data with other personal data concerning me/us in the Bank's possession and/or for the purpose of promoting, improving and furthering the provision of other financial services by the Bank and any other member of the ING Group to me/us generally, and/or any other purposes, and to such persons as may be in accordance with the Bank's general policy on disclosure of personal data as set out in any statements, circulars, notices or other terms and conditions made available by the Bank to me/us from time to time.

12.7           I/We have the right to request access to and correction of any of the Data or to request without charge the Data not to be used for direct marketing purposes. Any request may be made in writing and addressed to the Data Protection Officer, 39/F One International Finance Centre, 1 Harbour View Street, Central, Hong Kong (Facsimile No.281 04412). The Bank will comply with such request (and may charge a reasonable fee for processing and data access request) unless the Bank may be or is required to refuse to do so under the applicable law and regulations.

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13.           Default Interest

Interest will be charged on the daily balance of any amount outstanding from me/us at such intervals or rates and payable at such times as the Bank may specify from time to time. Overdue sums will carry interest at the Bank's customary default rate and shall be compounded according to normal banking practice at the Bank's discretion.

14.           Miscellaneous

14.1           The terms "I", "my", "mine", "me", "us" and "our" when used in these terms and conditions, refer to the customer of the Bank, being holder of the accounts maintained with the Bank and shall include one or more individuals, anyone or more holders of a joint account (and in relation to any such account, the liabilities shall be joint and several), sole proprietorship, partnership, corporation and unincorporated association or body, in each case, as the context may require.

14.2           These terms and conditions shall be binding on me/us and my/our estate, personal representatives, trustee in bankruptcy, receiver, liquidator or other successor. If we are a partnership, these terms and conditions shall apply notwithstanding any change in our membership by death, bankruptcy, retirement, receivership or winding-up or of any partner(s) or the admission of any new partner(s).

14.3           References to the Bank shall include its successors and assigns.

14.4           The singular or plural (and in relation to any such account, my liabilities shall be joint and several) shall each include the other and words imposing a gender shall include every gender unless otherwise indicated.

14.5           Any provision contained herein which is illegal, void, prohibited or unenforceable in any jurisdiction shall be ineffective only to the extent of such illegality, voidness, prohibition or unenforceability without invalidating the remaining provisions hereof, and any such illegality, voidness, prohibition or unenforceability in any jurisdiction shall not invalidate or render illegal, void or unenforceable any such provision in any other jurisdiction.

15.           Facsimile / Telephone / E-mail Instructions

15.1           We have requested and authorised the Bank to use facsimile, telephone and/or e-mail as a medium for giving instructions from me/us to the Bank relating to the mandate(s) or other agreement(s) between me/us and the Bank governing the operation of my/our account(s) or credit or other banking arrangements with the Bank.

15.2           Any telephone I e-mail orders and instructions given or purportedly given by my/our authorised signatories ("Authorised Signatories") pursuant to the account mandate maintained with the Bank from time to time on my/our behalf or any facsimile signed by me/us or my/our Authorised Signatories on my/our behalf shall be deemed to be given with the full authority and approval and shall be a sufficient authority to the Bank and conclusively binding on me/us, irrespective of whether such orders or instructions are subsequently confirmed by writing.

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15.3           The Bank shall be under no responsibility whatsoever to verify the authenticity or otherwise of any orders or instructions given to the Bank in the aforesaid manner. I/We accept full responsibility and liability for all consequences of the acceptance and execution of such orders and instructions. In particular, the Bank shall not be liable for any loss which I/we may suffer if the Bank acts on the telephone / e-mail instructions of a person other than the person authorised hereunder or if the Bank acts on instructions transmitted by facsimile upon which any of the signatures has been forged or is otherwise unauthorised but which the Bank believes, in relation to such person, to be one of those authorised or, in relation to such signatures, genuine or authorised.< /div>

15.4           The use of facsimile, telephone and/or e-mail as a means of communication to the Bank for giving instructions shall be entirely for my/our risk, except in the case of gross negligence or willful misconduct by the Bank. Should there be any indistinctness, ambiguity or other uncertainty in the contents of any such facsimile/telephone and/or e-mail instructions, the Bank shall be entitled to construe and execute such instructions in the manner in which it has been perceived by the Bank. Accordingly, I/we shall not hold the Bank liable for any loss, damages or claim or any other consequences arising from such construction and subsequent execution of instructions.

15.5           Notwithstanding anything herein contained, the Bank is entitled at any time in its sale and absolute discretion and without giving any reason therefor to decline any facsimile/telephone and/or e-mail orders or instructions given by me/us or my/our authorised signatories. I/We shall not hold the Bank liable for any loss, damage or claim or any other consequence arising as a result of the Bank declining the same.

15.6           In consideration of the Bank agreeing to accept and execute the facsimile/telephone and/or e-mail orders and instructions as aforesaid, I/we hereby agrees to indemnify and keep the Bank fully indemnified from and against all actions, proceedings, claims, demands, liabilities, damages, losses, costs or expenses of whatever nature which the Bank and/or its agents or employees may directly or indirectly suffer, incur or sustain by reason of its acting in accordance with the request and authority hereinbefore contained subject to the terms and conditions herein including, without limitation, the terms set out in clauses 15.4 and 15.5 hereof.

15.7           Insofar as no deviation thereof has been agreed upon in this Agreement, it shall be subject to the General Agreement by Customer(s) of which the Client has executed and as amended from time to time.

15.8           The request and authority and the indemnity hereinbefore contained shall remain in full force unless and until notice of revocation thereof in writing duly signed by or on my/our behalf is received by the Bank and the Bank has had a reasonable time to act upon the notice of revocation. Such revocation shall not release me/us from any liability hereunder in respect of any act performed by the Bank in accordance with the terms of this Agreement prior to the expiry of such time.

16.           Law and Jurisdiction

16.1           These terms and conditions are governed by the law in effect from time to time in Hong Kong Special Administrative Region.

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16.2           I/We hereby irrevocably submit to the non-exclusive jurisdiction of the Hong Kong Special Administrative Region courts.

17.           Assignment and Transfer

The Bank may novate, assign and/or transfer in whole or in part its rights and/or obligations under these terms and conditions, any related agreements or any related security documents to other lending institutions or persons or change its fending office without further consent of me/us or other parties.

Dated this 8 day of Dec 2009

For and behalf of Armco & Metawise (H.K.) Limited

Authorized Signature(s)

/s/ Yao Kexuan

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General Agreement By Customer(s)

To: ING Bank N.V.

Hong Kong Branch

In consideration of ING Bank N.V, (hereinafter called “ING BANK", which expression shall include its successors and assigns) agreeing to open or to continue my/our account(s) of whatsoever nature of from time to time making or continuing advances to me/us or negotiating on my/our behalf bills of exchange and/or invoices or other documents representing or relating to goods or opening or establishing at my/our request such documentary or other credits as ING BANK may think fit or providing other banking services and accommodation for me/us or any of us or for such other person, firm or company at my/our request as ING BANK may think fit, I/we hereby agree and undertake with INO BANK as follows:-

Payment

1. (a)            All moneys, obligations and liabilities whether past, present or future, actual or contingent, primary or collateral, joint or several, now or at any time hereafter due, owing or incurred to ING BANK anywhere from or by me/ us in any manner whatsoever in respect of any of the facilities made available by ING BANK for me/us or transactions undertaken by ING BANK for me/us as aforesaid on any account whatsoever (whether alone or jointly with any other person or persons and in whatever style, name or form and whether as principal or surety) including but not limited to the amount of any acceptance or other credits or advances and of any cheques notes or bills from time to time made accepted endorsed discounted or paid and of any liability under guarantees indemnities or other securities whatsoever incurred by ING BANK for or at my/our request shall be repaid by me/us immediately on demand by ING BANK together with interest thereon from date of demand to date of repayment at such rates and upon such terms as ING BANK may from time to time at its sale and absolute discretion determine, commissions, fees and other charges and all expenses (including legal and other costs on a full indemnity basis) however incurred by ING BANK in relation to me/us or anyone or more of my/our accounts or the preparation of or the enforcement of any guarantees or security now or hereafter held by ING BANK for any moneys, obligations or liabilities as aforesaid.

(b)           ING BANK shall cease to be under any further commitment to me/us and all term loans and other moneys obligations and liabilities hereby secured not otherwise so repayable shall become payable on demand and cash cover shall be provided on demand for all contingent liabilities on the occurrence of any of the following events of default, namely:-

(i)           if I/we fail to pay any money from time to time due to ING BANK on the due date or fail to comply with any provisions contained or incorporated in this Agreement or in any facility form or other agreement with ING BANK or if I in any respect considered by ING BANK to be material, any representation or warranty made to ING BANK by me/any one or more of us proves to be incorrect;

(ii)           if any other loan, debt or other obligation in respect of borrowed moneys (including for this purpose liabilities under acceptance credits, discounting, hire purchase, rental or other financial agreements becomes capable of being declared payable prior to its stated maturity by reason of default by me/us or is not paid when due;

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(iii)           if a petition is presented or an order made or a resolution passed for winding up of us I being n limited company or a notice is issued convening a meeting for the purpose of passing any such resolution (save for the purpose of and followed by reconstruction of amalgamation on terms previously approved in writing by ING BANK);

(iv)           if I or anyone or more of us shall die or commit an act of bankruptcy or become of unsound mind or make any general assignment for the benefit of creditors or any bankruptcy petition is filed against me/anyone or more of us;

(v)           if the security for any of my/our liabilities ceases to be in full force and effect or shall become unenforceable or an encumbrancer shall take possession or a Receiver shall be appointed of the whole or any part of my/our undertaking property or assets;

(vi)           if I/we (being a limited company) convene a meeting of or propose or enter into any composition or arrangement with creditors;

(vii)            if any judgment  or order made against me/anyone or more of us is not complied with within seven days or if an execution distress sequestration or other process he levied or enforced upon or sued out against any of my/our property or assets;

(viii)           if I/any one or more of us fail to pay my/our debts as and when they fall due or become or I being a limited company are deemed to be insolvent whether within the meaning of Section 178 of the Companies Ordinance (Cap.:32) or otherwise;

(ix)           if I/we stop payment or cease or threaten to cease to carryon business or any part thereof in the normal course or change the nature or mode of conduct of my/our trading in any respect which ING BANK may consider material;

(x)           if my/our undertaking property or assets or any part thereof from time to time considered by ING BANK to be material is sold disposed of or compulsorily acquired I otherwise than in the normal course of trading or on terms previously approved in writing by ING BANK:

(xi)           if there is any change in the name, constitution and/or composition of the society/firm/partnership carried on by all of us and in the name of which society/firm/partnership an account or accounts of whatsoever nature has/have been opened with ING BANK under and in accordance with the terms and conditions herein provided; and

(xii) if any of the foregoing events occurs in relation to any third party which has guaranteed or provided security for or given an indemnity in respect of any money, obligation or liability hereby secured.

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Interests and Commissions

2.           I/we shall pay commissions, interests, fees and charges at such rates as may from time to time be agreed between ING BANK and me/us (or, in default of agreement, at such rates as may be specified in writing by INO BANK) whose decision shall be final and conclusive and be binding on me/us. Interest at such rate or rates as ING BANK may from time to time charge its customers on similar account or accounts shall be payable on the cleared daily balance of the moneys, obligations and liabilities from time to time due owing or incurred by me/us to INO BANK as aforesaid and charged to my/our account monthly in arrears but without prejudice to the right of INO BANK to require payment of such interest and in the event of such interest not being  punctually paid, interest shall be capitalized and compounded with monthly rates in accordance with the usual practice of ING BANK. Interests commissions and fees will accrue from day to day and will be calculated on the basis of the actual number of days elapsed and a 365 day year or such other period as may be appropriate or customary having regarded to the currency (or currencies) in which the relevant facility (or facilities) are made available. Provided always that ING BANK shall have the right at any time or from time to times to charge interest on all moneys, obligations and liabilities due, owing or incurred by me/us to ING BANK as aforesaid at different rates on different accounts maintained by me/us with ING BANK or on different transactions.

3. General Hypo­thecation

 (a)           All bills of exchange drawn, accepted or endorsed by me/us, all produce and goods, bills of lading, warrants, delivery orders, wharfingers’ or other warehouse keepers certificates or receipts and all documents or title, invoices and like documents (and the produce and goods to which they relate) which are now or may at any time hereafter be (a.) warehoused or stored in the name of ING BANK or its agent or nominee or (b.) received by, deposited or lodged with, transferred to or otherwise held by or pledged to the order or under the control of ING BANK or its agent or nominee (either directly or indirectly whether from or by me/us or anyone or more of us or any other person and whether for safe custody, collection, security or for any specific purpose or genera lly) shall be held by ING BANK as a continuing security for the moneys, obligations and liabilities referred to in clause 1 above.

(b)           I/we hereby undertake to provide ING BANK with funds:-

(i)           to meet on demand all bills negotiated endorsed or advanced against or purchased by ING BANK for me/us or any one or more of us which may be dishonoured on presentation for acceptance or which may not be paid at the due date therefore according to the original tenor and all liability in respect thereof however arising and non-payment of a bill shall be deemed to have taken place if at that date funds have not been placed at the free disposal of ING BANK for the whole sum due;

(ii)           to reimburse ING BANK for all advances made against documents of title which may not have been duly taken up on presentation;

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(iii)           to meet exchange expenses and all interest commission discount and other banker’s charges legal notarial and other costs disbursements and expenses on a full indemnity basis; and

(iv)           to meet all freight warehouse dock transit and other charges the cost of insurance rent and all other costs of and incidental to the produce and goods represented by documents hypothecated to ING BANK hereunder.

(c)           ING BANK is hereby authorized at its absolute discretion without notice to me/us or further consent of any person interested:-

(i)           to insure all produce and goods represented by documents hypothecated to ING BANK hereunder against all insurance risks whether by land sea or air for their full value and recover the full amount from the insurers;

(ii)           to land and store or arrange for the storage of such produce and goods and/or re-ship the same to any other port;

(iii)           to pay all freight warehouse dock transit and other charges the cost of insurance rent and all other costs of and incidental to such produce and goods as ING BANK may from time to time think fit:

(iv)           to pay or retain and charge me/us with such charges for commission as are usual between merchant and correspondent and such interest re-exchange notarial end banking charges as are usually payable in these circumstances;

(v)           to take conditional acceptance of bills of exchange (including acceptances for honour) and/or to extend the due date for payment thereof upon such conditions as ING BANK thinks fit;

(vi)           to accept payment from drawees or acceptors (whether or not the acceptance is conditional before maturity under rebate or discount and on payment to deliver up the relative documents to or to the order of the drawees or acceptors;

(vii)           to accept part payment before maturity and to deliver such proportionate part of the produce and goods held against the same as ING BANK in its absolute discretion thinks fit;

(viii)           to convert into Hong Kong currency by telegraphic remittance or otherwise at the discretion of ING BANK any money received by ING BANK under or by virtue of this agreement and to debit my/our account with all costs charges and lose on exchange thereby incurred; and

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(ix)           to debit my/our account with all payments of freight warehouse dock transit end other charges the cost of insurance rent interest and all other expenses incurred hereunder and with all money chargeable to me/us under this Agreement and with the amount of unaccepted or unpaid bills of exchange or of advances against other documents of title for which I/we or any of us are liable to ING BANK or any deficiency arising after realization but so that ING BANK is under no obligation to do any of the foregoing end is not liable for any loss I/we may sustain as a result of ING BANK's delay or failure so to do.

(d)           ING BANK is hereby authorized to sell, assign, transfer, negotiate or otherwise dispose of all or any produce or goods represented by documents hypothecated to ING BANK hereunder or to which they relate without demand for payment or notice or further consent of any person at such time or times in such manner and for such consideration (whether payable or deliverable immediately or by installments) as ING BANK may in its absolute discretion think fit without being under any responsibility to me/us for the price obtained thereby in any of the following events:-

(i)           on default being made in acceptance on presentation or in payment at maturity of any bill of exchange or of any other sums due hereunder;

(ii)           on any drawee or acceptor of any bill (whether conditionally or absolute)suspending payment becoming bankrupt or insolvent Or taking any steps for composition or arrangement with creditors:

(iii)           if I/we fail to repay on demand any money obligation or liability due owing or incurred to ING BANK by me/us or any one or more of us with all interest commission discount and other banker's charges legal and other coats disbursements and expenses;

(iv)           on payment being made by ING BANK which it is authorized to make under this Agreement;

(v)           if and whenever ING BANK considers it desirable having regard to the then market value of the produce or goods that the same should be sold whether or not i/we shall have then become contingently or otherwise liable to ING BANK;

but so that ING BANK is under no obligation so to sell or otherwise dispose and is not liable for any loss I/we may sustain as a result of its delay or failure so to do.

(e)           I/we further undertake to facilitate any such sale or disposal by executing such documents as may from time to time be necessary or desirable to vest the produce or goods in ING BANK or its transferee or to effect delivery of the same as ING BANK may require and by doing all such acts and things as may from time to time be necessary or expedient. ING BANK is authorized to execute and sign any such document as my/our agent and to do any such act or thing on my/our behalf. I/we declare that the produce and goods are free from any other hypothecation pledge charge or encumbrance of any kind.

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(f)           After deduction of all expenses charges and commissions the net proceeds of the sa1e or other disposition of the produce and goods shall be applied at ING BANK absolute discretion in discharge or reduction of any actual or contingent debt obligation or liability due and owing to ING BANK by me/us or any one or more of us and any surplus shall (subject to the provisions of this Agreement) be at my/our disposa1. Any statement of account rendered to me/us by ING BANK shall be sufficient proof of the sale or other disposal of any produce or goods hereunder and of my/our deficiency resulting therefrom and shall for all purposes be conclusive between me/us and ING BANK.

(g)           I/we hereby undertake that the produce end good. represented by documents hypothecated to ING BANK will be kept insured in their full value against all insurable risks including fire and need and all policies whether effected by ING BANK or not are to be treated as part of ING BANK's security. Should any claim arise under any insurance ING BANK is hereby irrevocably authorized to recover the full amount thereof from the insurers and to give a valid receipt on my/our behalf and to charge the same commission on the proceeds as an a sale of the produce or goods and to apply such proceeds as if the same represented proceeds of sale of any produce or goods sold by ING BANK under the power contained above. I/we hereby undertake to assign to ING BANK all the relevant policies o f insurance for that purpose and to deliver them to ING BANK on demand and in the case of loss or damage to the produce or goods howsoever caused to pay over to ING BANK all sums received by me/us or any of us in respect of such insurance end make up my deficiency which may result in the amount of any moneys due to ING BANK and pending payment I/we shall hold all such sums in trust for ING BANK.

(h)           The holding by ING BANK of any additional guarantees or securities is not to prejudice the rights of ING BANK on any bills in case of dishonour nor shall any recourse or proceedings taken thereon or ING BANK giving time or granting any indulgence or making any arrangement or composition affect ING BANK's title to any security or my/our liability.

(i)           ING BANK shall not be liable for default by any insurer warehouse keeper broker auctioneer agent carrier captain or other officer of any ship or craft or other person employed in the insurance sale disposal storage shipment or carriage of any produce or goods or for any other purpose connected therewith nor for any deficiency in the quality or value of any produce or goods nor for the stoppage or detention thereof by the shipper or any other person whomsoever nor for loss on exchange rates or any loss damage or delay however caused.

4. Share and other Securities

 (a)           All stock, shares, certificates of deposit, bonds, notes and debenture stock certificates and other securities (whether marketable or not) which may from time to time be lodged with or held by ING BANK or transferred to ING BANK or its nominee or registered In the name of ING BANK or its nominee (whether for safe custody, security or for any other purpose) together with any substituted securities and. all dividends or interest thereon paid or payable after the date or this Agreement and all other money or rights accruing thereto or offered by way of redemption bonus option or otherwise (all of which are herein all or included in the expression “Securities”) shall be charged to ING BANK as a continuing security tor the payment and discharge of all the mo neys, obligations and liabilities referred to in clause 1 above but so that ING BANK shall not in any circumstances in incur any liability whatsoever in respect of any calls installments or other payments.

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(b)           l/we shall upon demand deposit with ING BANK and ING BANK shall be entitled to retain (i) all stock and share certificates and documents of title relating to the Securities and (ii) all the relevant instruments of transfers of the Securities duly completed in favour of ING BANK or otherwise as ING BANK may direct and such other documents as ING BANK may from time to time require for perfecting its title to the Securities or for enabling it to vest the same in itself or its nominee or in any purchaser to the intent that ING BANK may at any time thereafter if it shall consider it prudent so to do present them for registration without notice to me/us.

(c)           At any time after ING BANK shall have demanded payment or discharge of any money obligation or liability hereby secured (or if requested by me/any one or more of us):-

(i)           ING BANK and any nominee or ING BANK wheresoevor situate any exercise without further notice in respect or all or any of the Securities all the powers conferred upon mortgagee. By the Law of Property Act 1925 of the United Kingdom as hereby varied or extended as if the provisions thereof were incorporated in extensor in this Agreement (save that the restrictions imposed by Sections 93 and 103 of the said Law of Property Act 1925 shall not apply) and nothing that shall be done by or on behalf of ING BANK shall render it liable to account as a mortgagee in possession for any sums other than actual receipt; and

(ii)           any dividends interest or other payments which may be received or receivab1e by ING BANK  or by a nominee in respect or any of the Securities may be applied by ING BANK as though they were proceeds of sale.

(d)           Until ING BANK shall have made demand as provided in Sub-clause 4(c) above:-

(i)           ING BANK will hold all interest and dividends paid on end received by it in respect or the securities for my/our account and will pay such interest and dividends to me/us upon being called upon to do so by me/any one of us; and

(ii)           ING BANK will exercise all voting and other rights and powers attached to the Securities as I/we may from time to time in writing direct.

(e)           ING BANK and its nominee at the discretion of ING BANK may exercise in my/our name or otherwise at any time whether before or after demand for payment and without any further consent or authority on my/our part in respect of the Securities any voting rights and all powers given to trustees by Sections 11 (4) end 11 (6) of the Trustee Ordinance (Cap.29) in respect of securities or property subject to a trust and any power or rights which may be exercisable by the person in whose name the Securities are registered but such power shall be exercised subject to the provisions or sub-clause 4 (d) above.

(f)            I/we hereby warrant to ING BANK that I/we am/are the beneficial owner of and have a good right to deposit and transfer the securities and the same are fully paid up and are free from any lien charge or encumbrance of any kind.

(g)           I/we hereby undertake to pay all calls or other installments and make all other payments in respect of the Securities and If I/we default in so doing ING BANK may if it thinks fit make such payments an my/our behalf. Any sums so paid by ING BANK shall be repayable by me/us to ING BANK on demand and pending such repayment shall be a charge on the Securities.

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(h)           I/we hereby undertake to maintain the value of the Securities at a sum equal to the moneys, obligations and liabilities from time to time by this Agreement with such margin as  may from time to time he specified in writing by ING BANK and to pay all calls installments or other payments if any) in respect of the Securities as and when the same from time to time become due.

5. Docu­mentary Credits

(a)           All documentary credits opened at my/our request by ING BANK (hereinafter collectively referred to as "the Credits" shall be subject to the Securities Customs and Practice for Documentary Credits (1993 Revision) of the International Chamber of Commerce (or any modification or amendment thereof for the time being In force), the provisions of which sha1l be deemed to be incorporated in this Agreement as if the same were set out in extenso herein.

(b)           Except insofar as ING BANK receives from me/us instructions in writing to the contrary we agree that part shipments may be made under the Credits and ING BANK and/or its agents may honour the relative drafts and if the Credits specify shipments in installments within stated periods and the shipper fails to ship in any designated period, shipments of subsequent instalments may nevertheless be made in their respective designated period and ING BANK and/or its agents may honour the relative drafts.

(c)           I/we agree that in the event of any extension of time for presentation of drafts, acceptances or documents or any other modification of the terms of the Credits at my/our request with or without modification to the others or in the event of any increase in the amount of the Credits at my/our request, this Agreement shall he binding upon me/us with regard to the Credits so increased or otherwise modified, with regard to drafts, documents and property covered thereby and with regard to any action taken by ING BANK and/or its agents in accordance with such extensions, increase or other modifications..

(d)           The beneficiaries of the Credits sha1l be deemed to be my/our agents and I/we assume all risks of their acts or omissions. Neither ING BANK nor its agents shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of the goods or property (hereinafter collectively referred to "the property") the subject of the Credits purporting to he represented by the relative documents for any difference in character, quality, quantity, condition or value of the property from that expressed in such documents, for the validity, sufficiency or genuineness of documents even if such documents .should in fact prove to be in any or all parts invalid, insufficient, fraudulent or forged for the time, place or manner in which shipment is made fo r partial or incomplete shipment or failure or omission to ship any or all of the property, for the character, adequacy, validity or genuineness or any insurance for the solvency or responsibility of any insurer, or for any other risk connected with insurance, for any deviation from instructions, delay, default or fraud by the shipper or anyone else in connection with the property or the shipping thereof, for the solvency, responsibility or relationship to the property of any party issuing any documents in connection with the property, for delay in arrival or failure to arrive of either the property or any of the documents relating thereto, for delay in arrival or failure to give notice of arrival or any other notice for any breach of contract between the shippers or vendors and me/us, for failure of any draft to bear any reference or adequate reference to the relevant Credits or failure of documents to accompany any draft at negotiation or failure of any person to send forward documents apart from drafts as required by the terms or the Credits each of which provisions if contained in the Credits itself may be waived by ING BANK,

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or for errors, omissions, interruptions or delays in transmission or delivery of any messages by mail, cable, telegraph, wireless or otherwise nor shall ING BANK be responsible for any error, neglect or default of any of its agents and none of the above shall affect or prevent the vesting of any of ING BANK's rights or powers hereunder. I/we further agree that any action taken by or omitted to be taken by ING BANK or by any of its agents and/or in connection with the Credits or the relative drafts, documents or the property shall be binding on me/us and shall not put ING BANK or any of its agents under any resulting liability to me/us.

(e)           I/we agree to procure promptly any necessary import and export or other licenses for the import or export of shipping of the property and to comply with all foreign and domestic governmental regulations in regard to the shipment of the property or the licensing thereof and to furnish such certificates in that respect as ING BANK may at any time require.

(f)           Without prejudice to the provisions of sub-clauses 5(i) and 6(a) below, if at my/our request ING BANK or any of its agents or correspondents countersigns or issues any guarantee or indemnity covering discrepancies between the documents actually presented under the terms of the Credits and the relative terms or such Credits I/we hereby unconditionally and irrevocably agree:-

(i)           to pay to ING BANK forthwith on demand all moneys and liabilities whatsoever which may be claimed or demanded from ING BANK and/or its agents and/or its correspondents or which ING BANK and/or its agents and/or its correspondents may be called to pay or shall pay or incur by reason of having countersigned or issued such guarantee or indemnity; and

(ii)           to indemnify and keep ING BANK fully indemnified from and against all actions, claims, demands, liabilities, damages, losses, costs and expenses of whatever nature that may be incurred, suffered, sustained or paid by ING BANK and/or its agents and/or its correspondents in connection with or arising out of such guarantee or indemnity or by reason of ING BANK having negotiated bill(s) notwithstanding the discrepancies in the documents.

(g)           If ING BANK makes any payment at my/our request in negotiating or purchasing from me/any one or more of us or any other person any document or draft in respect of a letter of credit or an authority to pay and discrepancies exist between any document or draft presented to ING BANK and the terms of the applicable letter of credit or authority to pay I/we agree to refund to ING BANK on demand, irrespectively of when such discrepancies are discovered, all moneys paid by ING BANK in respect of such document or draft and, without prejudice to the provisions of clause 5(i) and 6(a) below, I/we shall indemnify and hold ING BANK fully indemnified from and against all actions, claims, demands, liabilities losses, damages, costs and expenses or whatever nature which may result or w hich ING BANK may suffer incur or sustain in connection with or arising out of ING BANK’s action in making such payment as aforesaid. I/we further agree that ING BANK shall not be liable for any loss damage expense or delay howsoever caused, whether or not due to the negligence or default of ING BANK or its officers or correspondents, in repeat of any negotiation or purchase of documents or drafts as aforesaid including in particular, but without limiting the generality of the foregoing, any loss resulting from payment of a bill or draft being effected in a currency other than that in which it is drawn by reason of exchange control restrictions or other direction of a governmental or other authority or suspension of or interference with the means to effect transmission of the relevant payment.

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If ING BANK or its agent or correspondent considers in its discretion that it would be inadvisable to deliver up the shipping or other documents upon acceptance of any bill of exchange or draft. drawn or endorsed by me/ anyone or more of us, INO BANK and its agent and correspondent are hereby authorized to deliver up such documents as aforesaid only upon payment of the relevant bill of exchange or draft notwithstanding that such procedure may be contrary to me/our previous instructions.

(i)           Without prejudice to the provision sub-clause 5(f) above and sub clause 6(s) below, if ING BANK countersigns letters of guarantee or letters of indemnity covering the release of goods without production to the shipping companies and/or their agents and/or forwarding agents of the relevant bill of lading or other documents of title, I/we shall indemnity and hold ING BANK harmless from and against any and all consequence which may arise or result therefrom. I/we further undertake that we shall use my/our best endeavors to obtain the bills of lading and/or other documents of title to the said goods or produce and that upon their receipt I/we shall procure the absolute and unconditional release of ING BANK from the guarantee or indemnity and return the relevant documents to ING BANK for cancellation, I/we further authorize ING BANK to endorse In my/our name(s) all relative bills of lading so that such bills of lading may be delivered direct by ING BANK to the shipping companies and /or their agents and/or forwarding agents aforesaid and in order to give effect to this, in the case of shipments under letters of credit, I/we undertake to disregard all discrepancies (if any) between the shipping documents received and those called for by the relative letter of credit and to accept all such shipping documents as if they were all the documents end the only documents called for by the relative letter(s) of credit.

(j)           Where ING BANK makes any collection on any of my/our document or documents and drafts upon .my/our request, I/we agree that if credit has been given by ING BANK for any such document or documents and drafts such credit is conditional and is subject to collection and receipt by ING BANK of full payment of such document or documents and drafts and in the absence of such collection and receipt by ING BANK. I/we agree, upon ING BANK's demand to reimburse ING BANK for the amount so advanced. I/we further agree that in receiving any items for deposit or collection INO BANK assumes no responsibility beyond the exercise of due care. All items which are credited are so credited subject to actual payment in cash and ING BANK will not be liable in any way whatsoever for the fault o r negligible of its duly selected correspondents for any losses in transit and each such correspondent shall not be liable except for its own negligence. ING BANK and any of its agents may accept a draft or credit as conditional payment In lieu of cash settlement of any obligation but my/our obligation to ING BANK will not be discharged until ING BANK has duly received payment on such draft or credit.

(k) Except as otherwise specifically provided, collections are subject to the Uniform Rules for Collections (1995 Revision) or the International Chamber of Commerce (or any modification or amendment thereof for the time being in force).

6. Counter – Indemnity

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(a)           I/we hereby unconditionally and irrevocably agree to counter-indemnity and keep ING BANK fully indemnified from and against all action claims demand liabilities losses damages costs and expenses of whatsoever nature which may result or which ING BANK may suffer incur or sustain in connection with or arising in any way whatsoever as a consequence of ING BANK at my/our request or on my/our behalf giving any guarantee or Indemnity or opening any documentary or other credit or otherwise incurring or assuming any obligation (hereinafter collectively referred to as "the Guarantees") and to pay to ING BANK forthwith all moneys and liabilities whatsoever which may from time to time be claimed or demanded from ING BANK or which ING BANK shall pay or become liable to pay or suffer or incur under or by reason of or in connection with the Guarantees,

(b)           I/we hereby irrevocably authorize ING BANK without making prior demand to debit my account/the account of anyone or more of us with any moneys from time to time payable hereunder- and in the event of a debit balance resulting to charge interest thereon to date of repayment (notwithstanding any demand or any judgment obtained by the Bank or any other matter whatsoever at such rate as may from time to time be payable on such account in accordance with clause 2 above.

(c)           I/we hereby irrevocably authorize ING BANK to pay immediately any amounts demanded from ING BANK or which ING BANK from time to time becomes liable to pay under or by reason of the Guarantees without any reference to or further authority from me/us and without being under any duty to enquire whether any claims or demands on ING BANK are properly made notwithstanding that I/any of us may dispute the validity of any such claim, or demand and I/we shall accept any claim or demand on ING BANK as conclusive evidence that ING BANK was liable to pay and any payment which ING BANK makes purporting to be in accordance with the Guarantees are binding upon me/us.

(d)           I/we agree that any step taken by ING BANK in good faith under or in connection with the Guarantees shall be binding on me/us and shall not place ING BANK under any liability to me/us.

(e)           I/we further agree that ING BANK may at any time without prior reference to me/us determine the Guarantees or any of them or reduce the liability of ING BANK thereunder.

(f)           This counter indemnity shall not be in any way discharged or diminished nor shall the liability of me/any of us be affected by reason or any other indemnity assurance guarantee lien bill note mortgage security payment or other rights being or becoming wholly or in part invalid defective or unenforceable or otherwise failing to be perfected or enforced or being avoided on any ground whatsoever or by reason of ING BANK from time to time without the knowledge or consent of me/us varying releasing or releasing any of the same or granting any time indulgence or concession or compounding with any person or concurring in accepting or varying any compromise arrangement or settlement or omitting to claim or enforce payment or determining varying reducing or extending the terms of the Guarantees or any of them or by anything done or omitted which but for this provision might operate to exonerate me/us.

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(g)           I/we waive all rights of subrogation and agree not to claim any set-off or counter claim against any other person liable or to claim or prove in competition with ING BANK in the event of the insolvency of any such person or to have the benefit of or share in any indemnity guarantee or security now or hereafter held by ING BANK until ING BANK has been fully indemnified against all matters referred to sub-clause 6(a) above. Any security now or hereafter by or for me/any one or more of us which extends to any liability hereunder and all moneys at any time received in respect thereof shall be held in trust for ING BANK as security for my/our obligations hereunder. Money received by virtue or this counter -indemnity may be placed to the credit of a non-interest bearing suspen se account with a view to preserving ING BANK's rights to prove for the whole of its claim against any other person liable.

7. Set-Off

ING BANK may at any time without notice notwithstanding any settlement of account or other matter whatsoever combine or consolidate all or any of my/our then existing accounts (whether current deposit loan or of any other nature whatsoever and whether Subject to notice or not) and set-off or transfer any sum standing to the credit of anyone or more of such accounts wheresoever situated in or towards satisfaction of any of my/our liabilities to ING BANK on any other account or in any other respect whatsoever whether such liability be past, present or future actual or contingent primary or collateral and several or join. Where such combination set-off or transfer requires the conversion of one currency into another such conversion shall be calculated at the spot rate of exchange (as conclusively determined by ING BANK) at the time of the co mbination set-off or transfer.

8. Currency Indemnification

(a)           If for the purpose of obtaining judgment in any court in any country it becomes necessary under the law of such country to convert into a currency (hereinafter referred to as the “Judgment Currency") other than Hang Kong dollars or other currency in which my/our obligations under this Agreement are expressed to be payable (hereinafter referred to as the "Agreed Currency") an amount due in the Agreed Currency under or pursuant to this Agreement then the conversion shall be made, in the sole and absolute discretion of ING BANK, at the rate of exchange prevailing either on the data or default or an the day before the day on which judgment is given.

(b)           If there is a change in the rate of exchange prevailing between the date as of which conversion is made for the purpose of any ouch judgment and the data of payment of the amount due I/we will pay such additional amounts as may be necessary to ensure that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of payment will produce the amount then due under this Agreement in the Agreed Currency.

(c)           My amount due from me/us under this Clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Agreement.

(d)           The term "rate of exchange" in this Clause 8 means the spot rate at which ING BANK in accordance with its normal practice is able on the relevant date to purchase the Agreed Currency with the Judgment Currency and includes any premium and costs of exchange payable in connection with such purchase.

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9. Continuing Security

(a)           The security constituted by this Agreement shall be a continuing security in respect of all moneys, obligations and liabilities whether past, present or future, actual or contingent, primary or collateral, joint or several now or at any time hereafter due, owing or incurred to ING BANK and shall not cease to be in force by reason that I/we may not be indebted to ING BANK at some time or times after its execution and notwithstanding any settlement of account or other matter whatsoever and is in addition to and shall not merge or otherwise prejudice or affect the security created by any deposit of document or any guarantee 1ien pledge bill note mortgage or other security now or hereafter held by ING BANK or any right or remedy of ING BANK in respect of the same and shall n ot be in any way prejudiced or affected thereby or by the invalidity thereof or by ING BANK now or hereafter dealing with exchanging releasing modifying or abstaining from perfecting or enforcing any of the same or any rights which it may now or hereafter have or giving time for payment or indulgence or compounding with any other person liable. Any change in the constitution of ING BANK or the authorized signatories to this agreement shall neither affect the validity of nor discharge this agreement.

(b)           All moneys received by ING BANK from me/any one or more of us or any other person may be applied by ING BANK to such account or liability of mine/ours as ING BANK in its absolute discretion may from time to time conclusively determine.

10. Execution of documents, power of attorney

(a)           I/we shall if end whenever so required by ING BANK execute such further legal or other mortgages charges or assignments as ING BANK shall require over all or any of the Securities (including any substituted securities and any vendor’s lien) and/or any produce or goods hypothecated to ING BANK pursuant to this Agreement and any other transfers or documents ING BANK may from time to time require for perfecting its title to the same or for vesting or enabling it to vast the same in itself or its nominee or in any purchaser to secure all moneys obligations and liabilities hereby covenanted to be paid or otherwise hereby secured such further mortgage charges or assignments to be prepared by or on behalf of ING BANK at my/our cost and to contain an immediate power of sal e without notice and such other provisions for the benefit of ING BANK as ING BANK may reasonably require.

(b)           I/We by way of security hereby irrevocably appoint ING BANK and the persona deriving title under it jointly and also severally to be my/our Attorney to insert the name of ING BANK or its nominees or of any purchaser or to make any other alteration or addition in any transfers or other documents which ING BANK may require for perfecting its title to or for vesting the Securities or any documents aforesaid relating to any produce and goods from time to lime hypothecated to ING BANK pursuant to this Agreement in ING BANK or its nominee or in any purchaser and to make any alteration or addition to the Securities comprised therein or any such documents aforesaid or any other alteration or addition thereto and to re-delivered the same thereafter and otherwise generally for it and in its name and an its beha1f and as its act and deed or otherwise to execute seal and deliver and otherwise perfect or do any such transfer of or other documents and any legal or other mortgage charge or assignment over the Securities or any such documents aforesaid required by ING BANK and all such deeds assurances agreements instruments acts and things which may be required for the full exercise of all or any of the powers hereby conferred or which may be deemed proper on or in connection with any sale or disposition of any of the Securities or of any of the produce and goods represented by the documents aforesaid by ING BANK or its nominees or any of the purposes aforesaid and the appointment shall operate as a general power of attorney made under the Powers of Attorney Ordinance

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(Cap.8I). I/We hereby ratify and confirm and agree to ratify and confirm any instrument act or thing which any such attorney may execute or do.

(c)           ING BANK shall have the right to require me/us to transfer all or any of the Securities or all or any or the other documents from time to time held by or indorsed to ING BANK hereunder to such nominees or agents wheresoever’s situated as ING BANK may select and to hold all or any or such Securities or other documents aforesaid in any branch of ING BANK or with any correspondents or other agents whether in Hong Kong or overseas and all the Securities and other such documents shall be held at my/our expanse risk and responsibility.

11. Waivers Remedies

(a)           Any waiver by ING BANK of any event of default or any breech of any of the warranties covenants terms or conditions contained heroin or other relaxation or indulgence wanted at any time by ING BANK to me/any one or more of us shall without any express reservation to that affect by ING BANK be deemed to be without prejudice to and shall not affect the exercise at any time thereafter by ING BANK of all or any of its rights and remedies hereunder as though no such waiver had been mode or relaxation or indulgence granted.

(b)           No failure or delay on the part of ING BANK to exercise any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by ING BANK of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies provided herein are cumulative and are not exclusive of any remedies provided by law.

12. Non Responsibility

(a)           ING BANK shall not be responsible for any loss or damage or depreciation or diminution in value of any of the goods and produce from time to time hypothecated to ING BANK hereunder or of any of the Securities or any other document from time to time lodged with ING BANK or its agent or nominee (whether for safe custody security or otherwise).

(b)           If owing to exchange control restrictions or other circumstances beyond the control of NG BANK the payment of a bill or other instrument on my/our account is effected in a currency other than that in which it is drawn or expressed to be payable ING BANK shall not be responsible for any foreign exchange loss which arises as a result thereof.

13. Information

I/We undertake to deliver to ING BANK such financial or other information concerning my/our affairs, audited by auditors satisfactory to ING BANK as ING BANK may from time to time reasonably require and in particular but without limiting the generality of the foregoing, I/we undertake to notify ING BANK forthwith of any change in the character, extent or nature of my/our business.

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14.           Joint and Several Liability

Where there is more than one of the undersigned the obligation and undertakings herein contained are joint and several and shall be construed accordingly and none of the undersigned shall be entitled to any of the rights or remedies legal or equitable of a surety as regards the liabilities of the others of them. Each of the undersigned agrees and consents to be bound by this Agreement notwithstanding that any others who were intended to sign or to be bound by these presents may not do so or be effectually bound hereby and notwithstanding that this Agreement may be invalid or unenforceable against anyone or more of the undersigned whether or not the deficiency is known to ING BANK. ING BANK shall be at liberty to release compound with or otherwise vary or agree to vary the liability of, or to grant time or indulgence to, or make other arra ngements with, anyone or more of the undersigned without prejudicing or affecting its rights and remedies against the other or others. Where this Agreement is signed on behalf of a firm, all agreements undertakings and liabilities shall be binding both on the present partners and on the persons from time to time carrying on business in the name of such firm or under the name in which the business of such firm may from time to time be continued.

15.           Notice

Any notice or demand for payment by ING BANK hereunder shall without prejudice to any other effective mode of making the same be deemed to have been sufficiently made hereunder on me/us if sent by post to my/our last known place of business or (in the case of a limited company) its Registered Office and shall be assumed to have reached the addressee within 24 hours of posting and in proving such service it shall be sufficient to prove that the notice or demand was properly addressed and posted. Any such notice or demand or any certificate as to the amount at any time secured hereby shall be conclusive and binding upon me/us if signed by an officer of ING BANK.

16.           Governing Law

This Agreement and all contracts or other transactions arising out of this Agreement shall (unless otherwise expressly provided in such contracts or transactions) be governed by and interpreted in accordance with the laws of Hong Kong and I/we hereby irrevocably submit to the non-exclusive jurisdiction of the Hong Kong Courts.

17.           Interpretation

In this Agreement unless the context otherwise requires, the singular shall include the plural number also and vice versa. Paragraph headings are inserted for convenience of reference only and shall not affect the interpretation of this Agreement.

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Dated 8 Dec 2009_

SIGNED SEALED AND DELIVERED

by

 /s/ Yao Kexuan

in the presence of

SEALED WITH THE COMMON SEAL OF

Armco & Metawise (UK) Ltd AND SIGNED BY

 Yao Kexuan /s/ Yao Kexuan

for and on behalf of

Armco & Metawise (HK) Ltd

in the presence of :-

Chu Yi /s/ Chu Yi

* N.B. If executed by a limited company, a certified copy of the resolution of the Board of Directors of the company approving the execution of this Agreement (such resolution to be in the Bank's standard form) must be attached hereto.

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Assignment of Receivables

Date: 8 Dec 09

ING Bank N.V., Hong Kong Branch

39/ Fl., One International Finance Centre

1 Harbour View Street, Central

Hong Kong

Uncommitted Banking Facilities

In consideration of your agreeing to open any documentary and/or standby letter of credit (each, the "Letter of Credit") and/or to advance any loan (the "Loan") to us and/or to negotiate export bills under export documentary credit (the "Negotiation") for us from time to time as requested by us subject to your General Agreement by Customer(s), General Agreement Relating to Commercial Credits and the terms previously agreed by us and in addition to paying you Letter of Credit commission and/or Loan/Negotiation interest and/or other related bank charges, we hereby assign and transfer to you absolutely and unconditionally, as beneficial owner, all our rights, title and interest to which we are or may become entitled to as seller of Mineral ores & coal (the "Goods") referred to in any letter of credit, DP (document against payment), DA (d ocument against acceptance) or any other document acceptable to you which forms part of any sales transaction (where we are the seller thereof) which is related to or is connected with any Loan and/or any Letter of Credit and/or Negotiation, including our right to receive all and any proceeds of sale of the Goods (provided always that we remain obliged to perform all of our obligations in relation to the sale of the Goods). We agree that after discharging all our obligations related to any Loan and/or Letter of Credit and/or Negotiation, the balance of such sale proceeds, if any, shall be credited to our account with you.

This letter shall be governed by and construed in accordance with the laws of Hong Kong Special Administrative Region.

IN WITNESS WHEREOF this Assignment of Receivables has been executed as a deed by Armco & Metawise (HK) Limited and is intended to be and is hereby delivered by Armco & Metawise (HK) Limited as a deed on the date specified above.

1 The COMMON SEAL of

ARMCO & META WISE (HK) LIMITED

was hereunto affixed in the presence of:

/s/ Yao Kexuan

[Director][ Authorised Signatory ]

1 Use this execution block if client has a common seal

Assignment of Receivables

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ING

WHOLESALE BANKING

Date: 3 December 2009

Yao Kexuan

c/o Armco & Metawise (HK) Limited

Rm 1407, China Resources Building

26 Harbour Road, Wanchai,

Hong Kong

Guarantee executed in favour of ING Bank N.V., Hong Kong Branch

Dear,

We refer to the guarantee (the "Guarantee") executed by you in favour of ING Bank N.V., Hong Kong Branch ("ING").

Pursuant to the requirements of the Code of Banking Practice, we are writing to inform you of your option to elect whether such Guarantee would remain unlimited or specify a limit on the amount. It is important that you read and understand the Guarantee. You are recommended to obtain independent legal advice as to your obligations under the Guarantee.

In particular, we would like to draw your attention to the following:

• by executing the Guarantee, you may become liable for the debt of the borrower which is covered under the Guarantee (the "Borrower");

• your maximum liability under the Guarantee is limited to USD15,OOO,000 which means that you will only be liable for the actual and contingent liabilities of the Borrower owed to ING up to the amount as stated;

• following a default by the Borrower under the financing arrangement, you would be called upon to honour your obligations under the Guarantee, which shall be payable immediately upon our demand; and

• your obligations under the Guarantee will only be released upon receipt and retention by ING of all outstanding amounts owed by the Borrower and after a statutory period of six months.

You are strongly advised to obtain the financial information of the Borrower and engage your own financial advisor to give you advice on such financial information before signing this acknowledgement letter.

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Kindly sign the enclosed copy of this letter and send it back to us by way of acknowledgement of the foregoing.

Yours sincerely,

For and on behalf of

ING Bank N.V., Hong Kong Branch

Authorized Signatory

Acknowledged by:

Name:

Date: 8 Dec 2009

ING Bank N.V.

39/F, One International Finance Centre,

1 Harbour View Street, Central, Hong Kong

GPO Box 2837

Telephone + 852 2848 8488

Facsimile + 8522877 2627

Swift: INGBHK HH

www.ing.com

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ING

WHOLESALE BANKING

Continuing Guarantee

To:           ING Bank N.V.

Hong Kong Branch

In consideration of ING Bank N.V. (hereinafter called "ING BANK") from time to time making or continuing loans or advances to or coming under liabilities or discounting bills for or otherwise giving credit or granting time or affording banking accommodation or facilities to or on account of

Armco & Metawise (H.K ) Ltd

(hereinafter (together or individually) called "the Principal") or any of them I/We

Yao Kexuan

(hereinafter (together or individually) called "the Guarantor") do hereby guarantee or (if more than one) do hereby jointly and severally guarantee, unconditionally and irrevocably, to ING BANK as follows:

1.           The Guarantor will pay to ING BANK on demand all moneys obligations and liabilities whether past, present or future, actual or contingent which are now or may at any time hereafter be or become due, owing or incurred and unpaid to ING BANK anywhere from or by the Principal in any manner whatsoever (whether alone or jointly with any other person and in whatever style name or form and whether as principal or surety) including the amount of any acceptance or other credits or advances and of any cheques, notes or bills made, accepted, endorsed, discounted or paid and of any liability under guarantees, indemnities or other securities whatsoever from time to time issued by ING BANK for or at the request of the Principal together with interest to the date of payment at such rate s and upon such terms as may be payable by the Principal (or which would have been so payable but for the liquidation or other incapacity of the Principal) together with commission and other charges and all expenses (including legal and other costs on a full indemnity basis) howsoever incurred by ING BANK in relation to the Principal or the preparation and enforcement of this Guarantee or any other guarantee or security now or hereafter held by ING BANK for any of such moneys, obligations or liabilities or in obtaining or attempting to obtain payment whether from the Principal or otherwise.

2.           This Guarantee shall be a continuing security and shall cover and extend to secure any moneys which shall for the time being constitute the ultimate balance owing from the Principal to ING BANK on each separate account or in any manner whatsoever notwithstanding the bankruptcy, liquidation, incapacity or any change in the constitution of the Principal or the Guarantor (as the case may be) or any settlement of account or other matter whatsoever until determined by not less than six calendar months' notice in writing given to ING BANK by the

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Guarantor provided always that notwithstanding determination as to the Guarantor this Guarantee is to remain a continuing security and such notice of determination shall not affect the liability of the Guarantor for amounts owing or obligations or liabilities present or future certain or contingent incurred or arising out of the obligations or liabilities incurred prior to the expiration of such notice but maturing thereafter. In ascertaining the amount of such obligations and liabilities no account shall be taken of any bill, note or cheque or other creditable instrument which shall have been credited to the Principal's account at the expiration of such notice to determine but which is afterwards dishonoured, provided that, in the event of the Guarantor being an individual and dying or coming under a disability, such notice may be given on behalf of the Guarantor, by his legal representative or the committee, receiver.

3.           The obligations of the Guarantor hereunder shall be to make payment to ING BANK, in the currency in which the applicable obligation ought to have been or ought to be discharged by the Principal, strictly in accordance with the terms and provisions of any agreement or agreements, expressed or implied, between ING BANK and the Principal applicable to each respective obligation of the Principal, regardless of any law, regulation or decree, now or hereafter in effect, which affects or might in any manner affect any of such terms or provisions or ING BANK's rights as against the Principal.

4.           ING BANK may at any time without prejudice to this Guarantee and without discharging or in any way affecting the liability of the Guarantor hereunder and without giving notice to the Guarantor or any of them:

(i)           determine, renew, vary or increase any credit or facilities to the Principal or the terms and conditions in respect of any transaction with the Principal whatsoever;.

(ii).            grant to the Principal or to any other person any time indulgence or concession;

(iii)           renew any bills, notes or other negotiable or non-negotiable instruments or securities;

(iv)           vary, realize, exchange, release, modify or abstain from perfecting or enforcing or otherwise deal with, in whole or in part, any security or other guarantee or right which ING BANK may now or hereafter have from or against the Principal or any other person;

(v)           compound with, discharge, release or otherwise vary the liability of the Principal or any other person or Guarantor;

(vi)           make any concession to the Principal or do anything or omit or neglect to do anything which but for this provision might operate to exonerate or discharge the Guarantor from any obligation herein contained; and

(vii)           vary the rate of interest, commission or charge payable by the Principal to ING BANK.

5 (a) This Guarantee and the liability of the Guarantor hereunder shall not in any way be affected or diminished by reason of any security now or hereafter held by ING BANK in respect of the indebtedness of the Principal being irregular, defective, informal or void or otherwise unenforceable or by the failure of ING BANK to take any security or by any existing or future agreement by ING BANK as to the application of any advance made or to be made to the Principal.

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(b)           This Guarantee is to be in addition to and is not to prejudice or be prejudiced by any other security, negotiable instrument or guarantee which ING BANK may now or hereafter hold from the Guarantor or from any other person, firm or company or from or on account of the Principal.

6.           The liability of the Guarantor hereunder shall not be affected by the absence of or by any defective, excessive or irregular exercise of the borrowing powers of the Principal or the irregular or improper purported exercise thereof or the breach or want of authority by any person purporting to act on behalf of the Principal or because ING BANK's rights have become barred by reason of any legal limitation, disability, incapacity or by any other fact or circumstance (whether known or not known to ING BANK or the Guarantor) as a result of which any indebtedness or liability incurred or purported to be incurred by the Principal or by any other person purporting to act on behalf of the Principal is void or unenforceable by ING BANK against the Principal or if for any other reas on whatsoever the Principal is not or ceases to be legally liable to discharge any moneys, obligations or liabilities undertaken or purported to be undertaken on behalf of the Principal, it being agreed that in any such case the Guarantor shall be liable to ING BANK as principal debtor (notwithstanding the avoidance or invalidity of any assurance, security or payment on any ground whatsoever including but not limited to avoidance under any enactment relating to liquidation) in respect of that purported obligation, liability or indebtedness as if the same were wholly valid and enforceable and this Guarantee shall be construed as an indemnity for the same amount as that for which the Guarantor would have been liable by way of guarantee had a valid and enforceable indebtedness or liability as between the Principal and ING BANK been incurred. The Guarantor hereby agrees to keep ING BANK fully indemnified against all damages, losses, costs and expenses arising from any failure of the Principal to carry out any su ch purported obligation.

7.           As between ING BANK and the Guarantor, the Guarantor shall be deemed to be a principal debtor and ING BANK may demand payment hereunder from the Guarantor of any sum for the time being owing from the Principal or payable by, the Principal on demand notwithstanding that no demand may have been made upon the Principal.

8.           The Guarantor hereby warrants that he has not held and will not hereafter without the written consent of ING BANK take or hold on any account whatsoever any security from the Principal and in the event of the Guarantor taking or holding security now or at any time hereafter whether with or without the consent of ING BANK while any money obligation or liability (the payment whereof is hereby guaranteed) remains undischarged any such security and the documents relating thereto shall be forthwith unconditionally pledged or sub-pledged to and deposited with ING BANK to secure the obligation and liability of the Guarantor and if default is made in observing the preceding provisions of this Clause, the Guarantor will hold the same and all moneys Or income at any time received i n respect thereof in trust for ING BANK and as security for the liability of the Guarantor to ING BANK.

9.           This Guarantor shall take effect as a guarantee of the whole and every part of the moneys due or owing or payable and to become due or owing or payable as aforesaid and accordingly the Guarantor shall not be entitled as against ING BANK to any right of proof in the bankruptcy, liquidation or insolvency of the Principal or other right of a surety including the right of contribution from any other surety) discharging in whole or in part his liability in respect of the principal debt or to share in any security held or money received by ING BANK on account of

- 43 -

the obligations or the Principal unless and until the whole of such moneys shall have first been completely discharged and satisfied or until such moneys shall have been discharged and satisfied in full shall the Guarantor take any step to enforce any right or claim against the Principal in respect of any moneys paid by the Guarantor to ING BANK hereunder or have or exercise any rights as surety in competition with ING BANK. Furthermore, for the purpose of enabling ING BANK to sue the Principal or prove in the bankruptcy, liquidation or insolvency of the Principal for the whole of such moneys as aforesaid, or to preserve intact the liability of any other party, ING BANK may at any time place and keep in a suspense account or a securities - realized account, for such time as ING BANK may think prudent, any moneys received, recovered or rel eased hereunder or under any other guarantee or security to the credit either of the Guarantor or of such other person or transaction (if any) as ING BANK shall think fit, without any intermediate obligation on ING BANK's part to apply the same or any part thereof in or towards the discharge of the moneys as aforesaid, or any intermediate right on the part of the Guarantor to sue the Principal or prove in the bankruptcy, liquidation or insolvency of the Principal in competition with ING BANK or so as to diminish any dividend or other advantage that would or might come to ING BANK, or to treat the liability of the Principal as diminished.

10.           If this Guarantee is determined ING BANK may continue the then existing accounts or open a fresh account or accounts with the Principal notwithstanding such determination and the liability, actual or contingent, of the Guarantor for the amount owing from the Principal at the date when such determination of this Guarantee shall become operative shall remain and shall not in any manner be reduced or affected notwithstanding any subsequent payment into or out of any of such accounts or any transactions whatsoever subsequent to such determination by or on behalf of the Principal.

11.           In respect of the liability of the Guarantor hereunder ING BANK shall have a lien on and be entitled to retain any security or negotiable or non-negotiable instruments or other property whatsoever now or at any time hereafter held by ING BANK on the account of the Guarantor whether for safe custody or otherwise. ING BANK shall further be entitled at any time to set off without giving any notice to the Principal any credit balance in any accounts of the Guarantor with ING BANK (whether current deposit or for a fixed term or otherwise or subject to notice or not) against the liability of the Guarantor to ING BANK hereunder and to apply such moneys as ING BANK may think fit in satisfaction of the said liabilities.

12.           If at the time any demand is made under this Guarantee and any amount shall be due or owing or payable to ING BANK from the Principal in a particular currency(ies) then the obligation of the Guarantor shall be to make payment in such currency(ies) but ING BANK shall be entitled at its discretion to require payment in any other currency(ies) of account at the rate(s) of exchange determined in good faith by ING BANK to be effective at the date of payment, or partly in one way and partly in the other:

13.           It is further agreed by the Guarantor that the Guarantor will indemnify ING BANK against any loss incurred by ING BANK as a result of any judgment or order being given or made for the payment of any amount due hereunder and such judgment or order being expressed in a currency other than that in which such amount is payable by the Guarantor hereunder and as a result of any variation having occurred in rates of exchange between the date as at which such amount is converted into such other currency for the purposes of such judgment or order and the date of actual payment pursuant thereto. The foregoing indemnity shall constitute a separate and independent obligation of the Guarantor and shall apply irrespective of any indulgence granted to the Guarantor from time to time an d shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.

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14.           Each payment to be made by the Guarantor hereunder shall be made to ING BANK, in the appropriate currency in accordance with the terms hereof, to the credit of ING BANK's account with such bank or banks located in the country of such currency or by such other method as shall be designated by ING BANK All such payments shall be free and clear of and without deduction or withholding for any tax of any nature now or hereafter imposed by any country or any sub-division or taxing authority thereof or therein or any federation or organization of which such country is a member. If any such payment shall be subject to any such tax or if the Guarantor shall be required to make any such deduction or withholding, the Guarantor shall pay to ING BANK such additional amount as may be necessary to enable ING BANK to receive, after all deductions and withholdings, a net amount equal to the full amount payable hereunder. As used in this clause the term "tax" includes all levies, imposts, duties, charges, fees, deductions, withholdings, turnover tax, transaction tax, stamp tax and any restrictions or conditions resulting in a charge.

15.           Any settlement or discharge between ING BANK and the Guarantor shall be subject to the condition that no security or payment to ING BANK by the Principal or any other person shall be avoided or reduced by virtue of any provisions or enactments relating to bankruptcy, liquidation or insolvency for the time being in force and if any such security or payment shall be so avoided or reduced ING BANK shall be entitled to recover the value or amount thereof from the Guarantor subsequently just as if such settlement or discharge had not occurred.

16.           Where any security is held by ING BANK for the liability of the Guarantor hereunder ING BANK shall be at liberty in its absolute discretion to retain such security after the repayment of all sums that are or may become due or the discharge to ING BANK of all liabilities from the Principal notwithstanding any release, settlement, discharge or arrangement given or made by ING BANK on or as a consequence of such repayment, until the expiration of any period or periods within which such repayment or discharge could be avoided or reduced and if at any time before the expiration of any such period or periods a petition shall be presented to a competent court for an order for bankruptcy or winding up (as the case may be) of the Principal, or the Principal shall commence to be w ound up voluntarily ING BANK shall be at liberty and notwithstanding as before mentioned to continue to retain such security or any part thereof for and during such further period as ING BANK in its absolute discretion shall determine and it is agreed that in such event such security shall be deemed to have been and to have remained held by ING BANK as and by way of security for the payment to ING BANK of all or any Sums which shall or may become due and owing to ING BANK from and by the Guarantor either under and by virtue of the terms and conditions of this Guarantee in the event of and upon or after any avoidance of any conveyance assignment, assurance, security or payment under any provisions or enactments relating to bankruptcy or liquidation or under and by virtue of the provisions of this Guarantee and any demand made by ING BANK pursuant to such provisions.

17.           Any notice or demand made by ING BANK hereunder shall be in writing signed by one of ING BANK's officers and may be served by leaving the same at, or sending it through the post in a prepaid envelope addressed to the company, firm or person on whom the demand is to be made, at the address last known to ING BANK as the registered or principal office, or, as the case may be, place of business or abode of such company firm or person and such demand or notice so served shall be effective (notwithstanding that it may later be returned undelivered) at the time it was so left or, as the case may be, at the expiry of forty-eight hours after it was posted excluding

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Saturdays, Sundays, and public holidays. In proving such service it shall be sufficient to prove that the envelope containing the notice or demand was properly addressed, stamped and posted. Any notice or demand served by telex or facsimile shall be effective at time of sending.

18.           A certificate signed by an officer of ING BANK as to the amount at any time due and owing by the Principal shall be conclusive evidence as against the Guarantor of the amount so due and owing in any legal proceedings in all courts of law or elsewhere.

19.           Irrespective of whether the Principal or the Guarantor is a company, individual or partnership, the liability of the Guarantor shall continue in force notwithstanding any change in the constitution of the Principal or the Guarantor and extend to all indebtedness and liabilities incurred after any such change occurs and shall not be affected by the death, bankruptcy or disability of the Principal Or the Guarantor. This Guarantee shall extend to all advances or general banking facilities or other accommodation whether past present or future granted by ING BANK to the Principal notwithstanding its absorption by or amalgamation with any other company or companies and to all advances or general banking facilities or other recommendation from any such absorbing or amalgamating company in like manner as if such absorbing or amalgamating company were named in and referred to herein

20.           In the event of an order being made upon ING BANK under Section 211 of the Companies Ordinance of Hong Kong (Cap. 32) or any statutory modification or re-enactment thereof directing ING BANK to pay any sum to a liquidator of the Principal such sum when paid by ING BANK shall be recoverable from the Guarantor and shall be repaid by the Guarantor on demand in writing by or on behalf of ING BANK and a release, discharge or settlement made or given by ING BANK on the faith of the payment into the account of the Principal with ING BANK of any sum which by virtue of the terms of any such order ING BANK shall be directed to pay to such liquidator shall be treated and accepted by the Guarantor as having been made or given by ING BANK upon the express condition that the same shal l be subject and without prejudice to ING BANK's right to recover payment of such sum from the Guarantor as provided herein.

21.           The liability of the Guarantor hereunder shall not be discharged, reduced or affected by any compromise, composition or arrangement sanctioned under Section 20 of the Bankruptcy Ordinance (Cap.6) or Section 166 of the Companies Ordinance (Cap.32) or any statutory modification or re-enactment thereof respectively (whether ING BANK has agreed to such compromise, composition, arrangement or not) and where by virtue of any such compromise, composition or arrangement the liability of the Principal to ING BANK or any part of such liability is transferred to any other company, this Guarantee shall take effect as if the expression "the Principal" includes such other company. Where by virtue of any agreement with the Principal and ING BANK or either or any of them any person assu mes all or any part of the liability of the Principal or if more than one any of them to ING BANK in substitution for the Principal the liability of the Guarantor hereunder shall not be discharged, reduced or affected but the Guarantee shall take effect as if the expression "the Principal" includes such person.

22.           All money payable hereunder by the Principal, the Guarantor or any person paying or purporting to pay on behalf of the Principal and/or the Guarantor shall be paid without any right of set-off in respect of moneys owing by ING BANK to the Principal or to the Guarantor and if the Principal maintains more than one account with ING BANK, ING BANK may demand payment hereunder of moneys owing on anyone or more of such accounts notwithstanding that in respect of any other such accounts moneys may be owing by ING BANK to the Principal or the

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Guarantor. For the avoidance of doubt, there is no obligation on the part of ING BANK to consolidate all the accounts of the Principal and/or the Guarantor before ING BANK makes any demand pursuant to the provision of this clause.

23.           The determination of this Guarantee by anyone or more of the Guarantor (if more than one) shall not release or determine or otherwise affect the operation of this Guarantee in relation to the other or others of the Guarantor and this Guarantee shall thereafter (subject to any determination by such other or others of the Guarantor) operate as a continuing guarantee by such other or others as a continuing guarantee by such other or others for the full amount recoverable under this Guarantee.

24.           Each of the Guarantor (if more than one) hereby agrees and consents to be bound by the provisions of this Guarantee notwithstanding that any other or others of them who were intended to execute or be bound by the provisions hereof may not do so or be effectually bound hereby for any reason whatsoever and notwithstanding that this Guarantee may be invalid or unenforceable against anyone or more of them whether or not the deficiency is known to ING BANK.

25.           If anyone or more of the provisions of this Guarantee or any part thereof shall be declared or adjudged to be illegal, invalid or unenforceable under any applicable law, such illegality, invalidity or unenforceability shall not vitiate any other provision of this Guarantee which shall remain in full force and effect.

26.           The liability of the Guarantor if more than one hereunder shall be joint and several and every agreement and undertaking on the part of the Guarantor shall be construed accordingly. ING BANK shall be at liberty to release of discharge anyone or more of the Guarantor (if more than one) from the obligations of this Guarantee or to accept any composition from or make any other arrangements with anyone or more of the Guarantor without thereby prejudicing or affecting ING BANK's rights and privileges against the other of the Guarantor.

27.           This Guarantee shall be governed by and construed for all purposes in accordance with the laws of Hong Kong and the Courts of Hong Kong shall have non-exclusive jurisdiction over any proceedings in connection herewith and the enforcement of the security hereby created.

28.           In this Guarantee:

(a)           The expression "ING BANK" where the context permits shall include its successors in title and/or assigns:

(b)           The expression "the Guarantor" where the context permits shall be construed as referring to each such person individually and anyone or more of such persons collectively and shall include his/her respective personal representatives and the committee, receiver or other person lawfully acting on behalf of such other person and all agreements, obligations and liabilities of the Guarantor herein contained or implied are joint and several and shall be construed accordingly;

(c)           The expression "the Principal" where the context permits shall include all or anyone or more of the Principal and shall also include their respective successors in title and/or assigns;

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(d)           The expression "this Guarantee" shall be construed as including and extending to any separate or independent covenant, stipulation or agreement herein contained;

(e)           The expression "person", "Principal", "Guarantor" shall include persons, firms, companies and any other corporate body; and

(f)           In these presents, if the context permits or requires the singular number shall include the plural number and vice versa.

SIGNED SEALED AND DELIVERED

Dated this 8 day of Dec 2009

BY Yao Kexuan

Whose address is at

No 95, Cultural Road

Jinshui District, Zhengzhou

He'nan Province, China

ID No.                      G36909575

In the presence of: Chu Yi

N,B, A certified copy of the resolution of the Board of Directors/Shareholders of the company approving the execution of this Guarantee must be attached hereto.

INGCRED 0004

EX-10.19 7 cnamexsales.htm ARMET (LIANYUNGANG) RENEWABLE RESOURCES CO., LTD. SCRAP METAL SALES CONTRACT BETWEEN DATED FEBRUARY 21, 2010.

Exhibit 10.[__]

[Translated from Chinese to English]

Portions of this Exhibit 10.[__] marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.

Scrap Metal Sales Contract

Contract Number: 10FG001S

Date: February 21, 2010

Location: WeiAn

Seller: Armet (Lianyungang) Renewable Resources Co., Ltd.

Buyer: [                      ]

Both parties based on equality, voluntariness, equitable and mutually beneficial, accordance to “Contract Law of People’s Republic of China” and other relevant laws, regulation accept the following contract, both parties have accepted the following terms.

1.   Both parties have been fully explained and understood provisions of this contract to each other.

2.   Both Parities fully understood the terms and provisions of this contract, and understand compliance of all these terms.

3.   Both parties agreed to comply with all terms of this contract.

I           Product name, size, volume, quality standard, delivery date and quantity

Produce Name,                                 Size,           Quality Standard,      Volume (tons/month),                                                    ;                        Delivery Date

Scrap metal, Crushed aggregates -              13,000 Monthly order                         Charging materials - 6,000                   Monthly order

         Heavy scrap - 4,000                   Monthly order

Total                                                                              23,000

II           Unit Price (Taxes included): to be determined on the 25th day of every month to calculate following month’s unit price per ton.

III           Delivery Discrepancy: Plus or minus 10%

IV           Transportation method, freight insurance and other expenses

Departure Location: Liangyungang, China Armet’s metal scrap facility,

Receiving location: [                      ]’s scrap metal storage. All transportation and insurance expenses are paid by the seller.

V                 Reasonable loss determination and calculation

      The calculation is based on the measurement by the loadometer of [                      ].

VI                 Quality requirement

       The delivered products should not mix with airtight containers, inflammable, explosives, and radioactive materials. The buyer has the right to send staff to monitor the production on site.

VII                  Inspection criteria

        The inspection conclusion is based on the scene inspection at Armet (Lianyungang) Renewable Resources Co., Ltd. The buyer confirms the inspection conclusion at the scene. Both parties negotiate to resolve if any disagreement may occur.

VIII                   Bill Settlement and payment

           After the products have been delivered and measured at [                      ], the buyer should make the payment within 7 days after the buyer has booked the invoice from the seller.

IX                       Changes in the contract

            The terms of the contract can be changed upon the agreement of the buyer and seller. The change takes effect upon the signatures and seals by both parties.

X                         Term

The contract is valid from February 21, 2010 to December 31, 2010.

XI                        Force majeure

When the unpredictable, unavoidable, and insurmountable events occur such as natural disaster and fire and deprive one party the capabilities to execute all or partial obligations in the contract, the party is exempt from penalty. The party that encounters force majeure shall notify the counterpart about the event by telephone or telegraph and provide the supporting evidence on the force majeure issued by authorized institution within 14 days after the occurrence of the event. If the impact of force majeure lasts more than 30 days, both parties should negotiate either to change the terms of the contract, continue the execution, or terminate the contract.

XII                        Disputes settlement

              The parties should negotiate to settle the disputes related to the contract. If the parties can’t reach agreement, either party can file lawsuit to the local court.

XIII                           Miscellaneous

                      This contract has four original copies, and each party holds two original copies. Each copy has the same legal force. The contract takes effect upon signatures and seals by both parties.

Buyer: [                      ]

Authorized Representative: /s/ Fazhan Yang

(Company Seal)

Seller: Armet (Lianyungang) Renewable Resources Co., Ltd.

Authorized Representative: /s/ Ji Zhang

Phone: 0518-68083830

Fax: 0518-68081111

(Company Seal)

EX-14.1 8 cnamexethics.htm CODE OF ETHICS

Exhibit 14.1

CHINA ARMCO METALS, INC.

Code of Business Conduct and Ethics

The upholding of a strong sense of ethics and integrity is of the highest importance to China Armco Metals, Inc. (the "Company") and critical to its success in the business environment. The Company's Code of Business Conduct and Ethics embodies the Company's commitment to such ethical principles and sets forth the responsibilities of the Company to its shareholders, employees, customers, lenders and other stakeholders. The Company's Code of Business Conduct and Ethics addresses general business ethical principles, conflicts of interests, special ethical obligations for employees with financial reporting responsibilities, insider trading laws, reporting of any unlawful or unethical conduct, political contributions and other relevant issues.

GENERAL PRINCIPLES

It is the Company's firm belief that effective business relationships can only be built on mutual trust and fair dealing. The Company and all its directors, officers and employees, to whom the Company's Code of Business Conduct and Ethics is applicable, will conduct themselves in accordance with the standards established herein.

The Company's Code of Business Conduct and Ethics outlines the fundamental principles of legal and ethical business conduct as adopted by the Board of Directors of the Company. It is not intended to be a comprehensive list addressing all legal or ethical issues which may confront the Company's personnel. Hence, it is essential that all personnel subject to the Company's Code of Business Conduct and Ethics employ good judgment in the application of the principles contained herein.

CONFLICTS OF INTEREST

Directors, officers and employees of the Company are expected to make decisions and take actions based on the best interests of the Company, as a whole, and not based on personal relationships or benefits. Generally, a "conflict of interest" is an activity that is inconsistent with or opposed to the best interest of the Company or one which gives the appearance of impropriety. As conflicts of interest can compromise the ethical behavior of Company personnel, they should be avoided.

Employees should avoid any relationship which would create a conflict of interest. Employees are expected to disclose such relationships and conflicts to their immediate supervisors. Conflicts of interest involving those with whom the Company does business should also be disclosed in writing to such third parties. Any waivers of conflicts of interest must be approved by the Board of Directors or an appropriate committee.

Members of the Board of Directors are to disclose any conflicts of interest and potential conflicts of interest to the entire Board of Directors as well as the committees on which they serve. Directors are to excuse themselves from participation in any decision of the Board of Directors or a committee thereof in any matter in which there is a conflict of interest or potential conflict of interest.

Set forth below is specific guidance in respect to certain conflicts of interest situations. As it is not possible to list all conflicts of interest situations, it is the responsibility of the individual, ultimately, to avoid and properly address any situation involving a conflict of interest or potential conflict of interest. Company personnel who wish to obtain clarification of the Company's conflicts of interest principles or further guidance with respect to the proper handling of any specific situation should consult his or her immediate supervisor, the Company's President or Chief Financial Officer or the

Company's outside legal counsel.

Proper Payments. All individuals should pay for and receive only that which is proper. Company personnel should not make improper payments for the purposes of influencing another's acts or decisions and should not receive any improper payments or gifts from others for the purposes influencing the decisions or actions of Company's personnel. No individual should give gifts beyond those extended in the context of normal business circumstances. Company personnel must observe all government restrictions on gifts and entertainment.

Supervisory Relationships. Supervisory relationships with family members present special workplace issues. Accordingly, Company personnel must avoid a direct reporting relationship with a family member or any individual with whom a significant relationship exists. If such a relationship exists or occurs, the individuals involved must report the relationship in writing to the Board of Directors.

FINANCIAL REPORTING RESPONSIBILITIES

As a public company, it is of critical importance that the Company's filings with the Securities and Exchange Commission and other relevant regulatory authorities be accurate and timely. Hence, all Company personnel are obligated to provide information to ensure that the Company's publicly filed documents be complete and accurate. All Company personnel must take this responsibility seriously and provide prompt and accurate answers and responses to inquiries related to the Company's public disclosure requirements.

The Chief Executive Officer  and Principal Financial and Accounting Officer of the Company have the ultimate responsibilities of ensuring the integrity of the filings and disclosure made by the Company as required by the rules and regulations of the Securities and Exchange Commission and other relevant regulatory authorities. In the performance of their duties relating to the Company's public disclosure obligations, the President, Principal Financial and Accounting Officer and all Company personnel must:

·   Act with honesty and integrity;

·   Provide information that is accurate, complete, objective, fair and timely;

·   Comply with rules and regulations of federal, state, provincial and local governments and other relevant public and private regulatory authorities;

·   Act in good faith with due care, competence and due diligence;

·   Respect the confidentiality of information acquired in the course of the performance of one's duties;

·   Promote ethical and proper behavior in the work environment; and

·   Report to the Chairman of the Audit Committee any conduct that the individual believes to be a violation of law of the Company's Code of Business Conduct and Ethics.

- 2 -

INSIDER TRADING

Insider Trading Policy

The Company's Board of Directors has adopted a comprehensive Insider Trading Compliance Policy that applies to all "Insiders" (as defined therein). Any breach of the Insider Trading Compliance Policy by an Insider to whom the Company's Code of Business Conduct and Ethics is applicable shall be treated as a breach of the fundamental principles of legal and ethical business conduct as outlined herein.

Regulation FD

Regulation FD (Fair Disclosure) implemented by the Securities and Exchange Commission provides that when the Company, or person acting on its behalf, discloses material nonpublic information to certain enumerated persons (in general, securities market professionals and holders of the Company's securities who may well trade on the basis of the information), it must make public disclosure of that information. The timing of the required public disclosure depends on whether the selective disclosure was intentional or unintentional; for an intentional selective disclosure, the Company must make public disclosures simultaneously; for a non-intentional disclosure, the Company must make public disclosure promptly. Under the regulation, the required public disclosure may be made by filing or furnishing a Form 8-K, or by another method or combinat ion of methods that is reasonably designed to effect broad, non-exclusionary distribution of the information to the public.

It is the policy of the Company that all communications with the press be handled through the Company's President and/or Vice President of Investor Relations.

Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is strictly forbidden.

Applicability of Insider Trading Regulations to Securities of Other Companies. The Company's Insider Trading Policy shall also apply to material nonpublic information relating to other companies, including the Company's customers, vendors or suppliers ("business partners"), when that information is obtained in the course of employment with, or other services performed on behalf of the Company. All employees should treat material nonpublic information about the Company's business partners with the same care as is required with respect to information relating directly to the Company.

DUTY TO REPORT INAPPROPRIATE AND IRREGULAR CONDUCT

All employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within the Company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to the Company's Chief Executive Officer  and Principal Financial and Accounting Officer; provided, however, that the incident must be reported to any member of the Company's Board of Directors if it involves an alleged breach of the Company's Code of Business Conduct and Ethics by the Chief Executive Officer  and Principal Financial and Accounting O fficer. Any failure to report such inappropriate or irregular conduct of others shall be treated as a severe disciplinary matter. It is against Company policy to retaliate against any individual who reports in good faith the violation or potential violation of the Company's Code of Business Conduct and Ethics of another.

- 3 -

POLITICAL CONTRIBUTIONS

No assets of the Company, including the time of Company personnel, the use of Company premises or equipment and direct or indirect monetary payments, may be contributed to any political candidate, political action committees, political party or ballot measure without the approval of the Company's Board of Directors.

COMPLIANCE PROGRAM

In order to implement the principles of the Company's Code of Business Conduct and Ethics and to establish a compliance program, the Company has adopted the following policies:

Access to Information. The Board of Directors encourages the presentation at meetings by managers who can provide additional insight into matters being discussed. The Company's executive management will afford each member of the Board of Directors full access to the Company's records, information, employees, outside auditors and outside counsel.

Audit Committee. The Audit Committee of the Board of Directors is responsible for the engagement of our independent public accountants, approves services rendered by our accountants, reviews the activities and recommendations of our internal audit department, and reviews and evaluates our accounting systems, financial controls and financial personnel.

Insider Trading Compliance.  The Board of Directors have adopted an Insider Trading Compliance Policy for the purposes of educating and ensuring that all persons are fully aware of the rules and regulations of the Securities and Exchange Commission with respect to insider trading. All Company personnel shall have full access to the President or Chief Financial Officer and the Company's outside counsel with respect to any insider trading questions or issues.

Financial Reporting; Legal Compliance and Ethics. The Board of Directors' governance and oversight functions do not relieve the Company's executive management of its primary responsibility of preparing financial statements which accurately and fairly present the Company's financial results and condition, the responsibility of each executive officer to fully comply with applicable legal and regulatory requirements or the responsibility of each executive officer to uphold the ethical principles adopted by the Company.

Corporate Communications. Management has the primary responsibility to communicate with investors, the press, employees and other stakeholders on a timely basis and to establish policies for such communication.

Access to President and Principal Financial and Accounting Officer. All Company personnel shall be accorded full access to the Company's President and Principal Financial and Accounting Officer with respect to any matter which may arise relating to the Company's Code of Business Conduct and Ethics; provided, however, that all Company personnel shall be accorded full access to the Company's Board of Directors if any such matter involves an alleged breach of the Company's Code of Business Conduct and Ethics.

EX-21.1 9 cnamexsub.htm SUBSIDIARIES OF THE COMPANY

EXHIBIT 21.1

China Armco Metals, Inc.

Subsidiaries of the Company

Name	Country of Incorporation	Dated Created
Armco & Metawise (HK), Ltd.	Hong Kong	July 13, 2001
Henan Armco & Metawise Trading Co., Ltd.	China	June 6, 2002
Armet (Lianyungang) Renewable Resources Co., Ltd.	China	January 9, 2007
Armco (Lianyungang) Holdings, Inc.	China	June 4, 2009

EX-23.1 10 cnamex23-1.htm CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference by China Armco Metals, Inc. in Amendment No. 1 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 on Form S-3 and the registration statement on Form S-8 (No. 333-162774) of our report dated March 31, 2010 on the consolidated balance sheets of China Armco Metals, Inc and Subsidiaries as of March 31, 2010 and 2007, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended appearing in China Armco Metals, Inc. Annual Report on Form 10-K for the year ended March 31, 2010.

/s/Li & Company, PC

Li & Company, PC

Skilling, New Jersey

March 31, 2010

EX-31.1 11 cnamex31-1.htm RULE 13A-14(A)/15D-14(A) CERTIFICATION

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Kexuan Yao, certify that:

1.  I have reviewed this annual report on Form 10-K for the nine month period ended December 31, 2009 of China Armco Metals, Inc. (the “registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2010	/s/  Kexuan Yao
	Kexuan Yao Chairman, President and Chief Executive Officer (Principal Executive Officer)

EX-31.2 12 cnamex31-2.htm RULE 13A-14(A)/15D-14(A) CERTIFICATION

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Fengtao Wen, certify that:

1.  I have reviewed this annual report on Form 10-K for the nine month period ended December 31, 2009 of China Armco Metals, Inc. (the “registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2010	/s/ Fengtao Wen
	Fengtao Wen Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1 13 cnamex32-1.htm SECTION 1350 CERTIFICATION

Exhibit 32.1

Section 1350 Certification

In connection with the Annual Report on Form 10-K of China Armco Metals, Inc. (the "Company") for the year ended December 31, 2009 as filed with the Securities and Exchange Commission (the "Report"), I, Kexuan Yao, Chief Executive Officer of the Company, and I, Fengtao Wen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 31, 2010	/s/    Kexuan Yao
	Kexuan Yao Chairman, President and Chief Executive Officer
Date: March 31, 2010	/s/    Fengtao Wen
	Fengtao Wen Executive Vice President and Chief Financial Officer

This certification accompanies this Transition Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10.19

Exhibit 10.[__]

[Translated from Chinese to English]

Portions of this Exhibit 10.[__] marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.

Scrap Metal Sales Contract

Contract Number: 10FG001S

Date: February 21, 2010

Location: WeiAn

Seller: Armet (Lianyungang) Renewable Resources Co., Ltd.

Buyer: [                      ]

Both parties based on equality, voluntariness, equitable and mutually beneficial, accordance to “Contract Law of People’s Republic of China” and other relevant laws, regulation accept the following contract, both parties have accepted the following terms.

1.   Both parties have been fully explained and understood provisions of this contract to each other.

2.   Both Parities fully understood the terms and provisions of this contract, and understand compliance of all these terms.

3.   Both parties agreed to comply with all terms of this contract.

I           Product name, size, volume, quality standard, delivery date and quantity

Produce Name,                                 Size,           Quality Standard,      Volume (tons/month),                                                    ;                        Delivery Date

Scrap metal, Crushed aggregates -              13,000 Monthly order                         Charging materials - 6,000                   Monthly order

         Heavy scrap - 4,000                   Monthly order

Total                                                                              23,000

II           Unit Price (Taxes included): to be determined on the 25th day of every month to calculate following month’s unit price per ton.

III           Delivery Discrepancy: Plus or minus 10%

IV           Transportation method, freight insurance and other expenses

Departure Location: Liangyungang, China Armet’s metal scrap facility,

Receiving location: [                      ]’s scrap metal storage. All transportation and insurance expenses are paid by the seller.

V                 Reasonable loss determination and calculation

      The calculation is based on the measurement by the loadometer of [                      ].

VI                 Quality requirement

       The delivered products should not mix with airtight containers, inflammable, explosives, and radioactive materials. The buyer has the right to send staff to monitor the production on site.

VII                  Inspection criteria

        The inspection conclusion is based on the scene inspection at Armet (Lianyungang) Renewable Resources Co., Ltd. The buyer confirms the inspection conclusion at the scene. Both parties negotiate to resolve if any disagreement may occur.

VIII                   Bill Settlement and payment

           After the products have been delivered and measured at [                      ], the buyer should make the payment within 7 days after the buyer has booked the invoice from the seller.

IX                       Changes in the contract

            The terms of the contract can be changed upon the agreement of the buyer and seller. The change takes effect upon the signatures and seals by both parties.

X                         Term

The contract is valid from February 21, 2010 to December 31, 2010.

XI                        Force majeure

When the unpredictable, unavoidable, and insurmountable events occur such as natural disaster and fire and deprive one party the capabilities to execute all or partial obligations in the contract, the party is exempt from penalty. The party that encounters force majeure shall notify the counterpart about the event by telephone or telegraph and provide the supporting evidence on the force majeure issued by authorized institution within 14 days after the occurrence of the event. If the impact of force majeure lasts more than 30 days, both parties should negotiate either to change the terms of the contract, continue the execution, or terminate the contract.

XII                        Disputes settlement

              The parties should negotiate to settle the disputes related to the contract. If the parties can’t reach agreement, either party can file lawsuit to the local court.

XIII                           Miscellaneous

                      This contract has four original copies, and each party holds two original copies. Each copy has the same legal force. The contract takes effect upon signatures and seals by both parties.

Buyer: [                      ]

Authorized Representative: /s/ Fazhan Yang

(Company Seal)

Seller: Armet (Lianyungang) Renewable Resources Co., Ltd.

Authorized Representative: /s/ Ji Zhang

Phone: 0518-68083830

Fax: 0518-68081111

(Company Seal)

EX-14.1

Exhibit 14.1

CHINA ARMCO METALS, INC.

Code of Business Conduct and Ethics

The upholding of a strong sense of ethics and integrity is of the highest importance to China Armco Metals, Inc. (the "Company") and critical to its success in the business environment. The Company's Code of Business Conduct and Ethics embodies the Company's commitment to such ethical principles and sets forth the responsibilities of the Company to its shareholders, employees, customers, lenders and other stakeholders. The Company's Code of Business Conduct and Ethics addresses general business ethical principles, conflicts of interests, special ethical obligations for employees with financial reporting responsibilities, insider trading laws, reporting of any unlawful or unethical conduct, political contributions and other relevant issues.

GENERAL PRINCIPLES

It is the Company's firm belief that effective business relationships can only be built on mutual trust and fair dealing. The Company and all its directors, officers and employees, to whom the Company's Code of Business Conduct and Ethics is applicable, will conduct themselves in accordance with the standards established herein.

The Company's Code of Business Conduct and Ethics outlines the fundamental principles of legal and ethical business conduct as adopted by the Board of Directors of the Company. It is not intended to be a comprehensive list addressing all legal or ethical issues which may confront the Company's personnel. Hence, it is essential that all personnel subject to the Company's Code of Business Conduct and Ethics employ good judgment in the application of the principles contained herein.

CONFLICTS OF INTEREST

Directors, officers and employees of the Company are expected to make decisions and take actions based on the best interests of the Company, as a whole, and not based on personal relationships or benefits. Generally, a "conflict of interest" is an activity that is inconsistent with or opposed to the best interest of the Company or one which gives the appearance of impropriety. As conflicts of interest can compromise the ethical behavior of Company personnel, they should be avoided.

Employees should avoid any relationship which would create a conflict of interest. Employees are expected to disclose such relationships and conflicts to their immediate supervisors. Conflicts of interest involving those with whom the Company does business should also be disclosed in writing to such third parties. Any waivers of conflicts of interest must be approved by the Board of Directors or an appropriate committee.

Members of the Board of Directors are to disclose any conflicts of interest and potential conflicts of interest to the entire Board of Directors as well as the committees on which they serve. Directors are to excuse themselves from participation in any decision of the Board of Directors or a committee thereof in any matter in which there is a conflict of interest or potential conflict of interest.

Set forth below is specific guidance in respect to certain conflicts of interest situations. As it is not possible to list all conflicts of interest situations, it is the responsibility of the individual, ultimately, to avoid and properly address any situation involving a conflict of interest or potential conflict of interest. Company personnel who wish to obtain clarification of the Company's conflicts of interest principles or further guidance with respect to the proper handling of any specific situation should consult his or her immediate supervisor, the Company's President or Chief Financial Officer or the

Company's outside legal counsel.

Proper Payments. All individuals should pay for and receive only that which is proper. Company personnel should not make improper payments for the purposes of influencing another's acts or decisions and should not receive any improper payments or gifts from others for the purposes influencing the decisions or actions of Company's personnel. No individual should give gifts beyond those extended in the context of normal business circumstances. Company personnel must observe all government restrictions on gifts and entertainment.

Supervisory Relationships. Supervisory relationships with family members present special workplace issues. Accordingly, Company personnel must avoid a direct reporting relationship with a family member or any individual with whom a significant relationship exists. If such a relationship exists or occurs, the individuals involved must report the relationship in writing to the Board of Directors.

FINANCIAL REPORTING RESPONSIBILITIES

As a public company, it is of critical importance that the Company's filings with the Securities and Exchange Commission and other relevant regulatory authorities be accurate and timely. Hence, all Company personnel are obligated to provide information to ensure that the Company's publicly filed documents be complete and accurate. All Company personnel must take this responsibility seriously and provide prompt and accurate answers and responses to inquiries related to the Company's public disclosure requirements.

The Chief Executive Officer  and Principal Financial and Accounting Officer of the Company have the ultimate responsibilities of ensuring the integrity of the filings and disclosure made by the Company as required by the rules and regulations of the Securities and Exchange Commission and other relevant regulatory authorities. In the performance of their duties relating to the Company's public disclosure obligations, the President, Principal Financial and Accounting Officer and all Company personnel must:

·   Act with honesty and integrity;

·   Provide information that is accurate, complete, objective, fair and timely;

·   Comply with rules and regulations of federal, state, provincial and local governments and other relevant public and private regulatory authorities;

·   Act in good faith with due care, competence and due diligence;

·   Respect the confidentiality of information acquired in the course of the performance of one's duties;

·   Promote ethical and proper behavior in the work environment; and

·   Report to the Chairman of the Audit Committee any conduct that the individual believes to be a violation of law of the Company's Code of Business Conduct and Ethics.

- 2 -

INSIDER TRADING

Insider Trading Policy

The Company's Board of Directors has adopted a comprehensive Insider Trading Compliance Policy that applies to all "Insiders" (as defined therein). Any breach of the Insider Trading Compliance Policy by an Insider to whom the Company's Code of Business Conduct and Ethics is applicable shall be treated as a breach of the fundamental principles of legal and ethical business conduct as outlined herein.

Regulation FD

Regulation FD (Fair Disclosure) implemented by the Securities and Exchange Commission provides that when the Company, or person acting on its behalf, discloses material nonpublic information to certain enumerated persons (in general, securities market professionals and holders of the Company's securities who may well trade on the basis of the information), it must make public disclosure of that information. The timing of the required public disclosure depends on whether the selective disclosure was intentional or unintentional; for an intentional selective disclosure, the Company must make public disclosures simultaneously; for a non-intentional disclosure, the Company must make public disclosure promptly. Under the regulation, the required public disclosure may be made by filing or furnishing a Form 8-K, or by another method or combinat ion of methods that is reasonably designed to effect broad, non-exclusionary distribution of the information to the public.

It is the policy of the Company that all communications with the press be handled through the Company's President and/or Vice President of Investor Relations.

Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is strictly forbidden.

Applicability of Insider Trading Regulations to Securities of Other Companies. The Company's Insider Trading Policy shall also apply to material nonpublic information relating to other companies, including the Company's customers, vendors or suppliers ("business partners"), when that information is obtained in the course of employment with, or other services performed on behalf of the Company. All employees should treat material nonpublic information about the Company's business partners with the same care as is required with respect to information relating directly to the Company.

DUTY TO REPORT INAPPROPRIATE AND IRREGULAR CONDUCT

All employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within the Company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to the Company's Chief Executive Officer  and Principal Financial and Accounting Officer; provided, however, that the incident must be reported to any member of the Company's Board of Directors if it involves an alleged breach of the Company's Code of Business Conduct and Ethics by the Chief Executive Officer  and Principal Financial and Accounting O fficer. Any failure to report such inappropriate or irregular conduct of others shall be treated as a severe disciplinary matter. It is against Company policy to retaliate against any individual who reports in good faith the violation or potential violation of the Company's Code of Business Conduct and Ethics of another.

- 3 -

POLITICAL CONTRIBUTIONS

No assets of the Company, including the time of Company personnel, the use of Company premises or equipment and direct or indirect monetary payments, may be contributed to any political candidate, political action committees, political party or ballot measure without the approval of the Company's Board of Directors.

COMPLIANCE PROGRAM

In order to implement the principles of the Company's Code of Business Conduct and Ethics and to establish a compliance program, the Company has adopted the following policies:

Access to Information. The Board of Directors encourages the presentation at meetings by managers who can provide additional insight into matters being discussed. The Company's executive management will afford each member of the Board of Directors full access to the Company's records, information, employees, outside auditors and outside counsel.

Audit Committee. The Audit Committee of the Board of Directors is responsible for the engagement of our independent public accountants, approves services rendered by our accountants, reviews the activities and recommendations of our internal audit department, and reviews and evaluates our accounting systems, financial controls and financial personnel.

Insider Trading Compliance.  The Board of Directors have adopted an Insider Trading Compliance Policy for the purposes of educating and ensuring that all persons are fully aware of the rules and regulations of the Securities and Exchange Commission with respect to insider trading. All Company personnel shall have full access to the President or Chief Financial Officer and the Company's outside counsel with respect to any insider trading questions or issues.

Financial Reporting; Legal Compliance and Ethics. The Board of Directors' governance and oversight functions do not relieve the Company's executive management of its primary responsibility of preparing financial statements which accurately and fairly present the Company's financial results and condition, the responsibility of each executive officer to fully comply with applicable legal and regulatory requirements or the responsibility of each executive officer to uphold the ethical principles adopted by the Company.

Corporate Communications. Management has the primary responsibility to communicate with investors, the press, employees and other stakeholders on a timely basis and to establish policies for such communication.

Access to President and Principal Financial and Accounting Officer. All Company personnel shall be accorded full access to the Company's President and Principal Financial and Accounting Officer with respect to any matter which may arise relating to the Company's Code of Business Conduct and Ethics; provided, however, that all Company personnel shall be accorded full access to the Company's Board of Directors if any such matter involves an alleged breach of the Company's Code of Business Conduct and Ethics.

EX-21.1

EXHIBIT 21.1

China Armco Metals, Inc.

Subsidiaries of the Company

Name	Country of Incorporation	Dated Created
Armco & Metawise (HK), Ltd.	Hong Kong	July 13, 2001
Henan Armco & Metawise Trading Co., Ltd.	China	June 6, 2002
Armet (Lianyungang) Renewable Resources Co., Ltd.	China	January 9, 2007
Armco (Lianyungang) Holdings, Inc.	China	June 4, 2009

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference by China Armco Metals, Inc. in Amendment No. 1 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 on Form S-3 and the registration statement on Form S-8 (No. 333-162774) of our report dated March 31, 2010 on the consolidated balance sheets of China Armco Metals, Inc and Subsidiaries as of March 31, 2010 and 2007, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended appearing in China Armco Metals, Inc. Annual Report on Form 10-K for the year ended March 31, 2010.

/s/Li & Company, PC

Li & Company, PC

Skilling, New Jersey

March 31, 2010

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Kexuan Yao, certify that:

1.  I have reviewed this annual report on Form 10-K for the nine month period ended December 31, 2009 of China Armco Metals, Inc. (the “registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2010	/s/  Kexuan Yao
	Kexuan Yao Chairman, President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Fengtao Wen, certify that:

1.  I have reviewed this annual report on Form 10-K for the nine month period ended December 31, 2009 of China Armco Metals, Inc. (the “registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2010	/s/ Fengtao Wen
	Fengtao Wen Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Section 1350 Certification

In connection with the Annual Report on Form 10-K of China Armco Metals, Inc. (the "Company") for the year ended December 31, 2009 as filed with the Securities and Exchange Commission (the "Report"), I, Kexuan Yao, Chief Executive Officer of the Company, and I, Fengtao Wen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 31, 2010	/s/    Kexuan Yao
	Kexuan Yao Chairman, President and Chief Executive Officer
Date: March 31, 2010	/s/    Fengtao Wen
	Fengtao Wen Executive Vice President and Chief Financial Officer

This certification accompanies this Transition Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.