Today, Armco Metal
Holdings announced its entrance into a stock purchase agreement for 100%
acquisition of Draco Resources, a California-based company engaged in the
exploration, mining, and trading of iron ore and minerals. The stock purchase
agreement calls for a stock exchange valued at approximately $46 million at the
closing price of Armco Metal Holdings as of April 15, 2014.
The closing of the
acquisition is subject to the completion of due diligence, approval from
shareholders, approval for continued listing by the New York Stock Exchange,
and approval by any applicable governmental regulatory agency. Once the
acquisition is successfully concluded, Draco Resources shareholders will own
approximately 72.8% of the total outstanding shares of the combined companies.
Commenting on the
stock purchase agreement, Kexuan Yao, Chairman and CEO of Armco Metals, stated,
“We are very excited about this acquisition for our company as we believe it
will enable strong, rapid growth over the next four years. Draco has the plan
in place to generate substantial cash flow for Armco Metals on a monthly basis
which in turn will enable us to use that cash flow to further expand our own
mineral trading business as well as our metal recycling operations. Management
believes the combined companies will significantly improve overall shareholder
value for years to come.”
At present, Draco
Resources holds exclusive rights of management, operation, distribution, and
sale of approximately five million metric tons of iron ore fine in the state of
Alabama. The company completed its first shipment of 55,000 metric tons on a
vessel bound for China in March 2014. Draco Resources anticipates shipping out
1 to 3 vessels of the same size to China per month. That equates to a total of
55,000 to 165,000 metric tons per month over the course of the next four years
or until the 5 million metric ton shipment is complete. Draco Resources
projects that it will make approximately $20 to $30 per metric ton based on the
current spot price of iron ore, CFR China.
A distributor of
imported metal ores and a steel recycler, Armco Metal Holdings has customers
which include some of the fastest growing steel producing mills and foundries.
The company’s product lines include ferrous and non-ferrous ore, iron ore,
chrome ore, nickel ore, magnesium, copper ore, manganese ore, steel billet, and
recycled scrap metals.
For more
information, visit www.armcometals.com
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