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Mining Operations(Guangxi)

 

The Group entered into an agreement with Feng Shan Xian Qian Xing Mining Industry Company Limiteds (Feng Shan) to acquire 51% equity interests in January 2009. It became the wholly-owned subsidiary after the acquisition of remaining 49% was completed in January 2011. The Group will further invest for the purpose of constructing a factory. Upon completion of this new factory by the end of 2011, Feng Shan will be able to contribute reasonable income for the group.

 

Feng Shan is principally engaged in the exploration, mining and processing of iron, through a 10-year permit, at the Long Da Ping Iron Mine in Guangxi province in the Peoples Republic of China. The Iron Mine, with an annual capacity of about 255,000 tons, has a general mining area of approximately 15.1944 square kilometres. Its proximity to Feng Shan County and the highways provides convenience to and facilitates transport arrangements.

 

According to a report titled Industry Research and Investment Analysis Report on Chinas: Iron Ore Mining Industry for 2008 issued by Research and Markets in August 2008, China consumes over 50% of the worlds iron ore production. The shortage of iron ore is expected to continue until 2011. With Chinas ongoing construction of infrastructure such as power stations, ports, highways and railways, continued growth in demand for iron ores is expected in the coming years. Moreover, iron ore prices are also blooming, driven by global appetite for steel in developing countries.

 

The Group will retain the existing management team of Feng Shan and provide professional finance and management staff to enhance Feng Shans management efficiency. To explore business opportunities in overseas markets, Feng Shan will provide technology, technicians and technical know-how, while the Group will provide merger and acquisition specialists, financial and fund management expertise. The management will actively expand its mining business through investing in related projects, making mining business its core operations.