China Armco Metals Reports Financial Results for the Second Quarter and First Six Months of 2009

    -   2nd Quarter 2009 Revenue Reaches $22.5 Million, a 71.2% Increase from 2nd Quarter 2008

    -   2nd Quarter 2009 Net Income Increases to $3.37 Million, a 82.2% Increase from 2nd Quarter 2008

    -   2nd Quarter Diluted EPS Climbs to $0.33 on 10.1 Million Shares as Compared to $0.24 on 7.6 Million 
            Shares

Financial Highlights

Revenue for the second quarter ended June 30, 2009 increased by 71.2% to $22.5 million compared to revenue of $13.01 million in the second quarter ended June 30, 2008. The increase in revenue was mainly attributable to increased sales from its metals distribution business in China as demand for metal ore rose significantly. Net income for the second quarter of 2009 was $3.37 million compared to $1.85 million in the second quarter of 2008. This increase was attributable to an improving pricing environment in metal ore in China coupled with the positive effects of China's November 2008 economic stimulus package. On a diluted basis, earnings per share for the second quarter of 2009 were $0.33 on 10.1 million common shares outstanding compared to $0.24 in the second quarter of 2008 on 2.5 million fewer shares.

The strong overall performance for the first six months of 2009 was largely driven by significant growth in our metals distribution business leading to record sales of $27.9 million for the first six months of 2009 compared to $22.79 million for the same period in 2008. Gross Profit for the first six months of 2009 was $4.63 million compared to $2.1 million for the first 6 months of 2008 period and net income was $3.5 million compared to $2.5 million which included a one-time gain of $1.2 million from a contract termination. On a diluted basis, earnings per share for the first six months of 2008 were $0.34 on 10.1 million common shares outstanding as compared to $0.38 in the same period in 2008 on 2.5 million fewer shares.

Balance Sheet

At June 30, 2009, total assets were $38.13 million, an increase of over 30% from the $28.82 million at December 31, 2008. At June 30, 2009 total current assets reached $25.52 million and working capital was approximately $6.15 million. Shareholder equity reached $18.76 million with 10.1 million common shares outstanding up from $15.29 million at December 31, 2009.

Commenting on the second quarter results, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated, "We are extremely pleased with the strong performance of our operations in the first half of 2009. Our sales efforts in the second quarter benefited from a strong rebound in several key metal markets. We believe this momentum will continue in the coming quarters and we intend to make every effort to improve our operating results further. We believe our expanded credit lines, coupled with the anticipated launch of our scrap metal recycling facility later this year places the company in the strongest financial position in its history and poised for an extended period of exceptional growth for the benefit of our shareholders."

About China Armco Metals, Inc.

China Armco Metals, Inc. (OTC BB:CNAM.OB - News) is engaged in China in the sale and distribution of metal ore and non-ferrous metals to the metal refinery industry in China. Armco supplies a range of raw materials and scrap metals for various metal refining and steel manufacturing industries. Armco maintains customers throughout China which include the fastest growing steel producing mills and foundries in the PRC. Raw materials are supplied from global suppliers in India, Hong Kong, Nigeria, Brazil, Turkey, the Philippines and Libya. Armco's product lines include ferrous and non-ferrous ore; iron ore, chrome ore, nickel ore, copper ore, manganese ore and steel billet. Armco also intends to enter into the steel recycling industry by constructing a steel recycling facility with initial recycling capacity of 1 million tons of steel scrap annually.

Safe Harbor Statement

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, China Armco Metals, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our guidance and expectations regarding revenues, net income and earnings. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations: Our belief that the Chinese economy is on the road to recovery, our ability to grow our distribution business and improve our operating results, our ability to obtain sufficient capital to fund our planned expansion and construction of a scrap steel recycling facility and our ability to successfully complete construction of our proposed scrap steel recycling facility, or, even if constructed, our ability to operate the proposed recycling facility at expected capacity levels and at a profit.

We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2008.