SAN MATEO, Armco Metals Holdings, Inc. ("Armco Metals") (NYSE MKT: AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that it entered into a steel scrap supply agreement with Midland Resources (China) Company Limited ("Midland"), a Hong Kong-based joint venture with Shagang Steel Group ("Shagang Steel"). Midland serves as the exclusive agent for Shagang Steel for the sale of its steel products in the Hong Kong markets. Midland fulfilled the sale of over 400,000 tons of steel products for Shagang Steel in 2013. Shagang Steel ranks as one of the largest importers of steel scrap in China.
Under the terms of the agreement, Armco Metals will act as a sourcing agent for Midland to import steel scrap into China. The agreement also enables Midland to utilize its import licenses and financing capabilities to import steel scrap for direct processing by Armco Metals. Processing under this method would substantially improve Armco Metal's cash flow and expand its processing capabilities. Armco Metals sees this as a significant first step in becoming a processing base for both Midland and Shagang Steel.
Commenting on the agreement, Kexuan Yao, Chairman and CEO of Armco Metals, stated, "Steel scrap is the only raw material in short supply in the steel industry, however, the challenges faced by declining steel prices has placed a huge burden on the whole industry supply chain. This situation has severely hampered our working capital in second half of 2013 as we were faced with customer defaults and declining inventory values. Our management team has reacted by implementing a strategic plan to establish a 'platform strategy' to help stabilize margins and achieve sustained profitability. Our profits, by nature, are mainly generated from scrap processing fees at our plant and this agreement with Midland allows for our new partner to manage much of the cash outlay for the importing and transportation of the steel scrap so we can increase our throughput in a far more profitable way. We believe that this importing partnership with Midland will be a win-win scenario for both companies for years to come. Additionally, we are seeking environmental regulatory approval to increase our importing license from 5,000 tons to 20,000 which we expect to receive in 2014. We see this as an important move for future expansion when steel markets cyclically recover and our cash flow improves."
ABOUT ARMCO METALS HOLDINGS, INC.
Armco Metals Holdings is engaged in the sale and distribution of metal ore and non-ferrous metals throughout China and is in the recycling business in China. Armco Metals' customers include some of the fastest growing steel producing mills and foundries throughout China. Raw materials are acquired from a global group of suppliers located in various countries, including, but not limited to, Brazil, India, Indonesia, Ukraine and the United States. Armco Metals' product lines include ferrous and non-ferrous ore, iron ore, chrome ore, nickel ore, magnesium, copper ore, manganese ore, steel billet and recycled scrap metals. For more information about Armco Metals, please visit www.armcometals.com.
SAFE HARBOR STATEMENT
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Armco Metals Holdings, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") are forward-looking and involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our expectations regarding our revenues and production related to our scrap metal recycling operations, pricing and demand for our product lines and the extent of government imposed energy and monetary policy restrictions and resulting blackouts and associated impact on our trading and recycling
We caution that investors should not place undue reliance on any forward-looking statements herein. 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. This press release is qualified in its entirety by the following, including, but not limited to, any expectations with respect to the Company's revenues and operations, institution of governmental regulations relating to our businesses and the international economic climate, and the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2012, and our subsequent filing with the Securities and Exchange Commission.
SOURCE: Armco Metals Holdings, Inc.
Armco Metals Holdings, Inc.