China Armco Metals (NYSE AMEX:CNAM)

GeoTeam® September 2010 Rodman & Renshaw notes:

China Armco Metals (NYSE AMEX:CNAM)

• Recycling operations will be disrupted due to electricity restrictions. The restrictions could run up to 30 days (or even longer?). Product not produced in QIII won't be available for sale in QIV. Quarterly results may remain lumpy.
• Testing and adjustments played a part in the recent slow down in recycling shredder in past quarter.
• Slow down the in September will effect 3rd and 4th quarter
• The downgrade in guidance was worst case scenario
• Next 12 months should see significant impact from new facility
• Awaiting drilling results of Australian mine venture. Should be known by end of year.
• With respect to SAIC, SAT and SEC reporting, explained possible differences between US and Chinese GAAP, impact of VAT accrued and paid and intercompany transactions; but didn't know if there was a problem reconciling the filings or not. They understood this is an issue that has to be dealt with.
• 1.5 million warrants with exercise price of 5.00
• 1.5 million warrants with exercise price of 7.50

GeoInvesting Question

Please address the fact that, as referenced in the below excerpt from your filings, you require funds to complete recycling expansion. How are you going to pay for this?

"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. 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."

Company Response:

With regards to the financing, the company did a Guaranty Cooperation Agreement with a steel company to free up its balance sheet to help deal with receivable and trade financing credit lines. See June 17, 2010 8k