China Armco Metals Agrees to Acquire up to a 19.9% Stake in Apollo Minerals Ltd., an Australian Iron

SAN MATEO, CA—(Marketwire - 06/09/10)—China Armco Metals, Inc. (AMEX:CNAM - News), a distributor of imported metal ore and metal recycler with a new state-of-the-art scrap metal recycling facility in China, today announced that it has agreed to Acquire up to a 19.9% stake in Apollo Minerals, Ltd. ("Apollo"), an Australian iron ore exploration company, for approximately U.S. $3.6 million in cash.

Apollo is an Australian iron ore exploration company listed on the Australian Securities Exchange. Apollo owns the exploration rights of two mineral tenements at Mount Oscar in the Pilbara region of Western Australia, containing a significant iron ore deposit. The Mount Oscar Project is located about 25 kilometers south of the Cape Lambert Iron Ore Project which delivered resource estimates of 1.5 billion tons of 31.2% iron ore that was sold in July 2008 to China Metallurgical Group Corporation (MCC) for over U.S. $300 million. Apollo's tenements are believed to contain a similar quality of iron ore as found at Cape Lambert. Geophysical models compiled by an independent consultant, Southern Geoscience Consultants, have estimated a total global tonnage of 800 million tons of iron ore between surface and a depth of 250 meters. Apollo intends to use the cash infusion to advance its exploration activities, to carry out processing-option studies and to evaluate opportunities to access local infrastructure and other project opportunities.

Under the terms of the agreement, Apollo will issue 12.5 million of its common shares in exchange for $1,875,000 to be held in escrow pending Apollo shareholder approval of the issuance of an additional 16.75 million common shares in exchange for $2,512,500. This will bring China Armco's total investment to $4.3 million or approximately U.S. $3.6 million for a 19.9% stake in Apollo. China Armco will have the right to name one member to Apollo's board of directors for as long as it maintains at least a 12% stake in Apollo.

Upon completion of the transaction, Apollo will issue to China Armco, subject to shareholder approval, a five-year option to purchase an additional 5 million shares of common stock at $0.25 per share, half of which will vest on the first anniversary of issuance, with the balance vesting on the second anniversary of issuance. The options may only be exercised in order for China Armco to maintain its 19.9% stake should Apollo issue additional common shares in the future. The grant of the right and options are subject to approval from the Australian Securities Exchange.

Additionally, Apollo has agreed to give China Armco the off-take rights to no less than 15% of the iron ore production from its Mount Oscar Project. Based on Apollo's estimated 800 million metric tons of iron ore reserves, the Mount Oscar Project could potentially provide China Armco with approximately one million metric tons of iron ore per year, after refining, which has the potential to generate revenue for China Armco in excess of U.S. $135 million annually at today's market prices.

Commenting on the announcement, Mr. Kexuan Yao, CEO and Chairman of China Armco, stated, “We are excited to enter into this agreement to acquire a stake in Apollo. Australia is well known for its wealth of iron ore resources and we are confident that Apollo's tenement holdings will provide substantial rewards to us both in return on investment and in future revenue from iron ore distribution through the off-take rights.”

Source: http://finance.yahoo.com/news/China-Armco-Metals-Agrees-to-iw-2254649461.html?x=0&.v=1