Nov 25 2015
Armco Metals Holdings, Inc. ("Armco Metals " or "the Company"), a distributor of imported metal ores, wood, and barley, and a steel recycler in China, today announced that its Armco Metals (Lianyungang) Holding, Ltd. subsidiary ("Armco Metals Lianyungang") entered into a contract with Lianyungang Chaoyang Construction & Development Co. Ltd. ("Chaoyang") on Nov. 19, 2015. According to the contract, Armco Metals Lianyungang would provide the service to disassemble three plant buildings built with steel framework, occupying an area of 15 thousand square meters, as well as all the equipment and facilities inside the buildings and the cleaning up.
Under the terms of the contract, Armco Metals Lianyungang would acquire the ownership of all the materials and scraps, including metal materials and non-metal materials, disassembled from the three buildings and pay CNY 4.88 million (approximately $0.76 million) to Chaoyang. The net revenue and gross profit generated from the sales of the materials is expected to be approximately $1.3 million and $0.35 million, respectively, with a gross margin of 27%, which is also the value realized from the dissembling service provided. Compared to current market price, the cost of the materials we would acquire from the disassembling services is estimated to be 20%-30% lower than market price. The contract for the disassembling starts from Nov. 19, 2015 and ends on Jan. 19, 2016.
Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "This is the first time Armco Metals Lianyungang is providing disassembling service and entering this business line, and it is a milestone for the company's platform strategy development which the company is on the endeavor to make business transition from solely selling products to providing various services in additional to selling products. We are also proud of our credentials, reputation and capacity we have achieved in the past, which only the highly qualified recycler can be selected for providing this kind of disassembling service. Taking the advantage of our state-of-the-art facilities and Chinese government's tax-refund policy only applied to qualified and eligible recyclers, we are furthering the implementation of platform strategy in all and every operation of our business to develop services-oriented business, and we are pleased to enter the disassembling service business that will expose us to tremendous similar services business opportunities in this market and become a new source of our revenue and income. Management deems this is a great progress we made toward our goal of our business transition and will continue to work in the direction."