China Armco Metals Inc. (CNAM)

[stocktrader80]

wonder if it could be the next SINO, CNAM was trading at 9.00 last year

[stocktrader80]

metals recycling is big in china due to manufacturing

[stocktrader80]

low float

[stocktrader80]

looking interesting this week

[floridagal]

Is anybody watching this today???? Moving up on good news...

[viking86]

China Armco Metals to Host 2011 First Quarter Earnings Conference Call on Monday, May 16th, 2011 at 5:00 p.m. ET

http://finance.yahoo.com/news/China-Armco-Metals-to-Host-pz-3046276863.html?x=0&.v=1

[Spudder]

Thanks. I am still holding some of this and hoping for a bit of a run up into earnings.

[viking86]

It's due Mid May, probably May 16.

[Spudder]

Anyone know when the next Q is due. Sometime in May if I remember correctly?

[viking86]

stock up 11%+ today. I think it's probably due to Yao surrendering 1.25MM of his shares pledged as collateral for a $4.93MM loan acc. to the YMB post below . Not sure if it's the Gentile loan that got Xao into trouble last year but market seems to like the implied valuation of the pleged shares.


Re: CEO disposed of 1.25 mil shares
1. The securities reported on this Form 4 were previously pledged as collateral (the "Collateral") for a full recourse note having a principal amount of $4.93 million plus accrued interest (the "Note") under which Mr. Yao was the borrower. Mr. Yao surrendered his rights in and to the Collateral in exchange for an agreement by the lender to cancel the Note in full.

Could this sub-note on the Form 4 submitted to the SEC tell you anything about the value of the company. If you do your math, the note holder was willing to CANCEL THE NOTE IN FULL in exchange for 1,250,000 shares and therefore values those shares at more than $3.94.

SEC Form 4 filed on April 15, 2011:
http://sec.gov/Archives/edgar/data/1410711/000112329211000293/xslF345X03/edgar.xml

[mojopuppy]

Revenue is not recorded until the customer takes possession of CNAM's product. So "delivered" = revenue, "produced" = inventory.

[viking86]

good to know, I also suspected something of that nature. For Q1 I have a similar question re. the "delivery" of 150,000 tons of iron ores by Usiminas. The mention of this in the recent 10K is somewhat ambiguous, in one section it's said they received the delivery in March, in another section it's said they (CNAM) delivered the 150 KT valued at $19.8MM. So did they receive the $19.8MM in Q1? Same ambiguity re. the 25,000MT of scrap steel "produced" in Q1? Were these sold in Q1? I sent IR an email about this, they said they will check with company on that and get back to me later.

From 10K:
"In January 2011, we entered into a contract with a Brazilian company, Mineracao Usiminas S.A., pursuant to which we agreed to purchase 150,000 MT of iron ore for distribution in the PRC. In March 2011, we received delivery of the 150,000 MT of iron ore".

"Through March, 2011 our metal ore trading business has completed and delivered two orders for iron and chrome ore with existing customers in China that include a combined volume of 8,000 tons with an aggregate value of approximately of $14.4 million. In addition, we delivered our first shipment of 150,000 MT of iron ore, valued at $19.8 million from one of Latin America's largest producer of steel based in Brazil".

"To date in 2011, we have received eight orders for recycled scrap steel from five customers, and we have produced approximately 25,000 MT of recycled scrap steel. In addition, we have entered into verbal agreements with two suppliers to supply us up to 50,000 MT of recycled scrap steel per month".

[mojopuppy]

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=102178&tid=22771&mid=22771&tof=2&frt=2

[mojopuppy]

Sure, go say hello.

[Spudder]

That would be interesting just to see their overall receptiveness to having a possible investor walk in.

i just realized i live one mile from their san mateo office. any takers i should pay a visit?

i have no position.

[foggysurf]

i just realized i live one mile from their san mateo office. any takers i should pay a visit?

i have no position.

[viking86]

China Armco Metals Announces Fourth Quarter and Full Year 2010 Financial Results

http://finance.yahoo.com/news/China-Armco-Metals-Announces-pz-2864477046.html?x=0&.v=1

[mojopuppy]

Its in the 10k under "our metal recycling operations"

In February 2010, we entered into a contract for the sale of scrap metal, crushed aggregates, charging materials and heavy scrap to a PRC steel producer. Under the terms of the agreement, the purchaser agreed to purchase up to 23,000 MT per month of a mixture of these materials for 10 months beginning in March 2010. However, as a result the electricity reduction policies implemented by the PRC in the third and fourth quarters of 2010, and delay in the delivery of certain machinery, we delivered approximately 10,000 MT under this contract to the customer, and the contract expired at the end of 2010.


In Q4 we saw two press releases stated certain delivers had "values" totalling 29MM, but they reported rev of 24.5MM

I speculate that there is disconnect between "value" and revenue. I have no idea what this disconnect is.

So If they have PR's totalling $47MM, then $35-$40mm would be my guess, unless they can reconcile how they missed in Q4.

[viking86]

I couldn't find any mention in the 10K that the large scrap contract has expired nor continued. I am waiting for a response from IR in this matter. I am hoping that the same customer may replace/renew his orders this year (it was 10 equal deliveries of 23K tons) as all other scrap suppliers had probably the same power restrictions last year but demand is certainly there as inventories are being replenished this year.

As far as Q1 forecast, there was mention in the 10K of 25,000 tons of ercycled scrap produced in Q1. Not sure if all revenue will be recognized to Q1 or not. If yes, then we may see about $12.5MM rev from scrap. Add the $34.2MM from trading (14.4MM and 19.8MM), that's 46.7MM rev anticipated from Q1. At this point that's all we know. But again, the fact that they spent more money buying 6 more cutters this year in addition to the 12 they already had last year is very positive I would think. Btw, the 10K mentioned in this context 1MM metric tons scrap production annual capacity.


From 10K: To date in 2011, we have received eight orders for recycled scrap steel from five customers, and we have produced approximately 25,000 MT of recycled scrap steel. In addition, we have entered into verbal agreements with two suppliers to supply us up to 50,000 MT of recycled scrap steel per month.

[mojopuppy]

Viking according to the 10k the contract has expired. There is no reference to a new contract.

To me the entire story here is sales. It would seem recycled steel is a commodity and they should be able to sell it on "the open market". But that doesn't appear to be the case.

The whole question at this point is "where are the sales?"

Based on what I read in the 10k and the q4 report I doubt Q1 rev will exceed 40MM.

[viking86]

These are certainly valid questions and concerns. I wish they had provided more clarity on the status of the scrap plant/rev stream in the PR and CC. The big question to me is whether the large scrap contract they got early last year for 10x23,000 tons of scrap valued at $100MM is still on the table or not. We know that they delivered only 1/10 or less of that contract last year. So if that contract is still good and can all be delivered this year (may be even at a higher per ton price ?), then there's a lot of revenue from there alone this year. I'll try to clarify that with IR or Worden.

Last Sep/Oct when they bought 6 (?) new cutters, I remember having seen an email from IR saying that the cutters would help increase effective annual capacity to about 800 tons/yr. Now they just bought a bunch more cutters, so I think we can expect a serious ramp up of scrap production as each cutter costs about 10K if I remember correctly.

There is much to be desired for the quality of guidance and delivering on promises for this company. Also getting a quality auditor would much enhance their credibility. But with all the PR/liquidity problems they are having, nobody can say they are a fraud. And that's to me is currently the biggest concern with investors in this space. If they can ramp up scrap production and build on the increasing incoming orders for the ore trading business, there is a decent chance that the SP will easily triple or much more this year from the currently very depressed level. Time will tell.

All my opinion and I stand to be corrected.

[mojopuppy]

I would certainly like to know what Andrew thinks for Q1 now given that in Q4 they posted press releases totally $29MM and reported $24.5MM.

The bigger issue is this -- you have a facility that can supposedly produced 1MM tons, lets say 750k as Andrew said. Its been half a year since it started operations. Do they have the sales or not, and what are gross margins? If the steel producers arent' making any money why should the recyclers?

At this point I expect more excuses in May for Q1. We really wont know where they stand until the Q2 report.

The good news is with this kind of bumbling, we can be 100% sure they are not frauds. No crook would ever make themselves look that stupid.

[viking86]

Q4 and Year 2010 earnings: Ouch!!

Fourth Quarter 2010 Results

Q4 2010 Q4 2009 CHANGE
Sales $24.5 million $31.7 million -23%
Gross Profit $0.8 million $3.2 million -76%
Net Income ($1.6) million $3.1 million N/A
EPS (Fully Diluted) (Loss) ($0.11) $0.31 N/A

Full Year 2010 Results
FY 2010 FY 2009 CHANGE
Sales $68.8 million $86.9 million -21%
Gross Profit $2.5 million $8.9 million -72%
Net Income (Loss) ($2.2) million $5.1 million -137%
EPS (Fully Diluted) (Loss) ($0.16) $0.51 N/A http://finance.yahoo.com/news/China-Armco-Metals-Announces-pz-2864477046.html?x=0&.v=1

[viking86]

China Armco Metals to Host Fourth Quarter and Year End 2010 Earnings Conference Call on Thursday, March 31, 2011 at 5:00 p.m. ET

http://finance.yahoo.com/news/China-Armco-Metals-to-Host-pz-1778841224.html?x=0&.v=1

[viking86]

I also talked to Andrew Worden today. We discussed sales expectations for Q1 and year 2011. He's expecting a very strong Q1 with about $70MM total revenue. For the year he expects about 60% capacity for the scrap plant at about $440-500/ton.

I subsequently checked the Company's recent PR's and came up with the following projections.

For Q1:

-ore trading : on Mar 14,2011 they announced the delivery of two orders for iron and chrome ore with a combined volume of 8,000 tons and aggregate value of $14.4MM. Plus they delivered 150,000 Tons of steel ore from the new brazilian supplier Usimina for an aggregate value of 19.8MM. Total ore delivery value for Q1= $34.3MM with an ASP of approx. $132/ton ores.

- recycled scrap: on Mar 14, they also announced 2 new orders from existing customers to produce and sell a combined volume of 10,000 tons of recycled metal worth approx. $5.4MM. The ASP for recycled metal is thus in the range of $440-$540/ton. This is on top of their existing 2010 order which was partially delivered last year and will continue into this year depending on their production capacity.

Including the above 10,000 tons, I would expect for Q1 a total production of about 10% annual capacity which is currently at about 100%=800,000 tons, or 80,000 tons recycled metal delivered in Q1.
Assuming an ASP of $500/ton, I get about 80K x 500 = $40MM scrap sales for Q1.

Add the $34.3MM trading revenue to the $40MM scrap revenue, I get a total estimate of approx $74MM rev for Q1, which agrees with Worden's estimate of 70MM.

Based on a rough estimate of net margin of 7.5%, the 70MM rev would yield a net inc of $5.25MM for Q1'11 compared to a net inc of $0.67MM in Q1'10, up almost 700% yoy. Or an eps of about $0.31 for Q1 alone which is probably more than twice the total expected eps of whole year 2010 (of about $0.13 acc. to my estimate).

All in all I am expecting a turnaround for CNAM this year which should continue well into coming years.


Through March, 2011 China Armco's trading business has completed and delivered two orders for iron and chrome ore with existing customers in China that include a combined volume of 8,000 tons with an aggregate value of approximately of $14.4 million.

The Company's also secured two new orders for its metal recycling business with existing customers to produce and sell a combined volume of 10,000 tons of recycled steel, with an aggregate value of approximately of $5.4 million.

[registeredfororpyct]

lots of after hour trading.. what teh heck?

[registeredfororpyct]

yes the company thinks.. or says they will have capacity to do 1 million per year, however talking to Mr Worden he thought that CNAM was exaggerating and they would be closer to 750,000, however at the presentation last week CNAM stated they 'have room' to expand eventually to 2 million

[mojopuppy]

Are you sure the current scrap capacity is 1MM tons per year? I thought it was much smaller than that, with the potential to be 1MM in time.



". The recycling facility is expected to be capable of recycling one million metric tons of scrap metal per year which will position the Company as one of the 10 largest recyclers of scrap metal in China. "

[Spudder]

Thanks for that clarification. This is indeed exciting news, and you would think they are in the running to get the scrap steel contract. Just to get this import contract bodes quite well going forward.

[jd22]

Spudder, The contract to CNAM is for sale of IRON ORE, you are looking at Usimina steel production capacity.

Usiminas is selling iron ore to CNAM and CNAM is distributing it to the chinese steel companies so that they can make their own steel.

Here's the interesting thing going forward, The steel producer that just bought the 150k m.tons will probably need a portion of scrap steel to mix this iron ore with when making the steel. Is CNAM going to supply this scrap?

By Chinese legislation, steel companies must go greener and save energy too, with the appropriate mix of recycle scrap. CNAM announced this completed contract out of the blue. Will they do the same with a large scrap contract? I hope so...

Here is a completely bullish scenario that will help with your antacids. If CNAM can find buyers for the 3 million metric tons that Isiminas wants to supply and a 3-1 mix ratio for iron to scrap is required that would be 1 million metric tons of scrap, CNAM's annual production capacity.

Just something positive for the weekend after a hellish technical week.
jd

[Spudder]

This is a great contract! 2012 numbers don't quite add up though. Either a miss print or Usiminas is going to expand its production capabilities by quite a bit.

Usiminas (BM&F Bovespa: USIM3, USIM5 / NYSE: USNZY / BMAD: XUSIO, XUSI) is one of the largest producers of steel in the Americas, with major steel mills in Brazil with a total capacity of 9.5 million metric tons of steel per year. The Company accounts for 28% of the total steel output in Brazil.

We are delighted to commence our partnership with international giant steel mills such as Usiminas," said Mr. Kexuan Yao, Chairman and CEO of China Armco. "With the intention of the Usiminas to deliver 3 million metric tons of iron ore in 2011, as well as potentially 20 million metric tons in 2012 to China

[viking86]

Stock up nicely today on news of big brazilian iron ore delivery order.

Brazilian Steel Giant Inks Major Metal Distribution Agreement With China Armco Usiminas Partners With China Armco for Its First China Export of Iron Ore

SAN MATEO, Calif., March 17, 2011 (GLOBE NEWSWIRE) -- China Armco Metals, Inc. (NYSE Amex: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and metal recycler with a new state-of-the-art scrap metal recycling facility in China, announced today that it has delivered its first shipment of 150,000 metric tons of iron ore, valued at $19.8 million, from Mineracao Usiminas S.A (Usiminas), one of Latin America's largest producer of steel based in Brazil. With a total capacity of 9.5 million metric tons of steel per year, Usiminas' order marks the start of a long term relationship between the two companies. With this agreement concluded at a recent meeting between the management of both companies in Brazil, China Armco becomes the first company to assist Usiminas to export its iron ore to China.



"We are delighted to commence our partnership with international giant steel mills such as Usiminas," said Mr. Kexuan Yao, Chairman and CEO of China Armco. "With the intention of the Usiminas to deliver 3 million metric tons of iron ore in 2011, as well as potentially 20 million metric tons in 2012 to China, we appreciate the confidence and support by the management of Usiminas by executing this agreement. We are pleased with their acknowledgment of our strong capabilities to assist them in reaching their objectives. At the same time, this strategic relationship offers us a strong opportunity to secure our metal distribution position in China while maximizing profitability."

About Mineracao Usiminas S.A (Usiminas):

Usiminas (BM&F Bovespa: USIM3, USIM5 / NYSE: USNZY / BMAD: XUSIO, XUSI) is one of the largest producers of steel in the Americas, with major steel mills in Brazil with a total capacity of 9.5 million metric tons of steel per year. The Company accounts for 28% of the total steel output in Brazil. Usiminas had approximately US $7.7 Billion in revenues with a net income of approximately US $898 million for the fiscal year ended 2010. For further information, please visit http://eng.usiminas.com/

[lovethatgreen]

some good news finally

[mojopuppy]

This stock, like many other chinese small caps, needs to do two things -- make their numbers, and stay out of the news.

To my knowledge there is no 2011 guidance for CNAM. Obviously there wont be much confidence in guidance that is provided, should they give some, given last year.

If they make their numbers, though, I don't see why CNAM can't trade at 6x trailing EPS, which could easily put this thing at $8.

They are going to need a new auditor. CNAM is too small and cheap to attract short attention but a run from 2 to 8 coupled with a no name auditor with a troubled past is just asking for it in today's environment.

2-4 years out, if / when china has cleaned up its act on corporate governence, multiple expansion + good growth could give this thing biotech like returns.

[pickinstocks]

Holy smokes, shares down 9% on the day right now. I don't care if they overpromised and underdelivered throughout last year. There is no question they have the means to do the numbers they have put out, it's just a matter of getting there. I already see improvement in their handling of IR, which gets some of my confidence back. Any thoughts on how much cheaper this can really get, because it's going from cheap to a steal very quickly IMO.

[floridagal]

I'm down 73%, so here I sit until this stock turns around...GLTY

[castboy]

Same here I am down 70% but no way am I selling here.

[floridagal]

Agreed, and thank you for responding. I'm just so red on this stock that it would be nice to finally see it run.

[viking86]

not sure but most CGS stocks are down today, probably b/c of the uncertainty with CCME whose trading was halted on friday with still no news from the company. The events in Japan also don't help with the global sentiment.

[floridagal]

Good morning, new to the board. Been invested in CNAM for some time now. Could someone explain why, with good news, this stock is trading down today?

[viking86]

PR about $14.4MM of ore orders delivered and 2 new orders for recycled metal in Q1:

Press Release Source: China Armco Metals, Inc. On Monday March 14, 2011, 7:30 am

SAN MATEO, Calif., March 14, 2011 (GLOBE NEWSWIRE) -- China Armco Metals, Inc. (AMEX:CNAM - News) ("China Armco" or the "Company"), a distributor of imported metal ore and metal recycler with a new state-of-the-art scrap metal recycling facility in China, today announced it has delivered two new iron ore orders to customers serving iron and steel producers in China, in addition to two new orders secured for recycled steel.

Through March, 2011 China Armco's trading business has completed and delivered two orders for iron and chrome ore with existing customers in China that include a combined volume of 8,000 tons with an aggregate value of approximately of $14.4 million.

The Company's also secured two new orders for its metal recycling business with existing customers to produce and sell a combined volume of 10,000 tons of recycled steel, with an aggregate value of approximately of $5.4 million.

"We are pleased to begin the new year with strong orders in both of our business segments when quarter one normally is steel industry's weak quarter," said Mr. Kexuan Yao, Chairman and CEO of China Armco. "With the stabilization of iron prices and the end of power conservation plans imposed by the government, we are now beginning to see measured progress. We are confident in our ability to reach our goals as we position China Armco for further growth in 2011 and beyond."

[revtruelove]

Someone should sell me their shares for $3.13 each.

[registeredfororpyct]

heard their is going to be a pr today or tomorrow

[registeredfororpyct]

heard their is going to be a pr today or tommorow

[viking86]

an increase of 48% is huge, esp. with near-record iron ore prices.

The average price of imported ore stood at $151 per ton in January, close to the record of $154.4 per ton set in August 2008, Zhang said.

[registeredfororpyct]

Iron ore imports up 48% in january, freight costs drop! can you hear the cash register? i can!

Higher steel production and higher prices, coupled with lower freight costs and a stronger yuan, boosted iron ore demand, Bloomberg quoted Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd, as saying.

BEIJING, Feb. 15 (Xinhuanet) -- Chinese iron ore imports surged 48 percent to a record in January, compared with a year ago, as traders replenished stocks in expectation of rising ore prices. Imports climbed to 68.97 million tons in January, up 18.8 percent from 58.08 million tons in December, according to the General Administration of Customs on Monday.

The previous record for iron ore imports was 64.55 million tons in September 2009.

"Chinese steel mills and traders bolstered iron ore inventories because they expect ore prices will further go up due to rising steel prices, leading to a jump in iron ore imports," said Zhang Lin, a senior analyst with Beijing Lange Steel Information Center.

The average price of imported ore stood at $151 per ton in January, close to the record of $154.4 per ton set in August 2008, Zhang said.

Extreme weather in Australia and Brazil, coupled with rising inflation also drove up coal and iron ore prices. Coking coal and iron ore supplies from top exporter Australia have been disrupted by massive floods.

Steelmakers have ramped up production and raised metal prices for downstream industries. Steel production rose 2.6 percent to 51.5 million tons in December from a month earlier, according to the National Bureau of Statistics.

[registeredfororpyct]

i was able to use the mountains in the cnam photos and terrain software and triangulate its position into somewhere in the red circle, but the roads are all new and i cant find them

http://img197.imageshack.us/i/1111exo.jpg/

[registeredfororpyct]

hi guys i managed to obtain the address to the scrap recycling yard is their anyone here who can help me find it on a map?

Southern Zong 1st Road, Banqiao economic development zone, Lianyun District, Lianyungang city.

[registeredfororpyct]

http://www.armcometals.com/downloads/CNAM%20PPT.pdf

just some info for those curious about cnam operations

[GorillaGorilla]

I don't follow any junior miners. Does anyone know what we should be looking for? I mean they could just keep running around drilling holes everywhere and updating us (I don't think this is the case, I'm just saying!).

Has anyone seen a timescale? Or what we should be looking for to know that this is progressing?

rich