SAN MATEO, CA - Armco Metals Holdings, Inc. ("Armco Metals Holdings") (NYSE MKT: AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that its Armco Metals International, Inc. subsidiary ("Armco International") enters into an agreement with a Chile supplier for woodchips purchase on September 8, 2014.
Under the terms of the agreement, Armco International would purchase a trial shipment of Eucalyptus Nitens wood chips from the supplier with an amount of approximately 50,000 Green Metric Tons ("GMT") (±10%) in October 2014 and an one year total importation of 550,000 to 600,000 GMT if the trial shipment is successful. Based on the current market price in China, the market value for 600,000 GMT woodchip is approximately $63,000,000 and we estimate and aim to realize 10% gross margin on potential sales of the product. Armco International's trading business team have been working diligently to add this new product to our trading business line. Capitalizing on over a decade experience and expertise in international trading business and product sourcing, with plenty of bank trading facility, our team has conducted extensive market and industry research and feasibility study, including but not limit, international vendor and product sourcing, shipping and logistic analysis, financing facility arrangement, and customer identification and network.
China is the world's biggest producer of paper and paperboard, however, with the lack of sufficient quantity of high quality domestic wood fiber supply, new pulp mills in China are looking to expand importation of wood chips from plantation-rich countries to meet their growing needs. China's area of eucalyptus plantations doubled between 2006 and 2012, but still will not be sufficient to meet demands due to problems with frost, and may also have problems with pests and disease due to very narrow genetic base. With the growing domestic pulp production, importation of woodchips by China surges during the past few years and the country has been the world's largest importer of hardwood chips since the second quarter of 2013.
Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "While keep confident in our metal ore trading and recycling business, management has been making efforts to diversify our product line and develop new profitable products into our business line. With the proven ability and expertise of our team in international trading and sourcing, we have the unique advantage to expand our business scope and carry new product which offers mitigated risks and high return potential. We will capitalize on our formidable business development team to develop the new product and expand into non metal ore business that offer high growth potential, as well as higher profit margins. We look forward to providing more updates on the developments and anticipate unlocking considerable value for our shareholders."
ABOUT ARMCO METALS HOLDINGS, INC.
Armco Metals Holdings, Inc. 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 http://www.armcometals.com.
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