Sys, what's throwing a lot of people (and it's no doubt why the shorters have been able to exploit this so easily) is that they don't realize that there's a real "game changer" at work here with the revs from the scrapmetal recycle plant. There were zero such revs last year and zero such revs for Q1 2010. But a sales contract for recycled scrap WAS signed in Feb., for $100M (on the first 25% capacity that became available), and the first income from that should have started to trickle in in June, with a flood coming in Q3 and Q4, not to mention whatever other contracts might suddenly show up with more recycle capacity as it becomes available any week/month now...
The shorts have been able to exploit fear and uncertainty over whether the recycle plant is "for real" because the recycle operations have been a little slow (2-3 months, it seems) in getting off the ground. But it looks like we have five sources expressing confidence in such operations:
1) the initial buyer of the first contract ("a major Chinese steel producer" accord to the P.R. on 3/4/10, perhaps Henaan Chaoyang, see below).
2) Heping Ma, a member of CNAM's Board of Directors, and founder, Chairman and 85% owner of steel co. Henan Chaoyang. Mr. Ma has insured CNAM's line of credit. (There is speculation that it is Henan Chaoyang which made the first purchase of scrap, but this is just speculation, as far as i understand.)
3) The Lianyungang Environmental Protection Bureau, which granted CNAM a "certificate of approval for its new state-of-the-art scrap metal recycling facility."
4) Chairman/CEO Kexuan Yao himself, who in the last few months bought more shares/options of his company (owns 57% of CNAM as of March 2010 according to Viking86).
5) We might also add the institutional buyers of the $10M worth of shares at $6.50.
HOpe this helps...
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