China Armco Metals Inc. (CNAM)

[JB3729]

I am considering purchasing CNAM and have a question for the board. Does anybody know if CNAM had to honor the contracts they PR'd on 4/27.

The contracts call for CNAM to purchase up to 37,000 tons of scrap metal per month from local suppliers for the rest of the year. IF, and this is an important if, CNAM honored the contracts then they possibly bought 74,000 tons of scrap and shipped 10,000 tons of scrap in quarter 2, which amounts to 64,000 tons of inventory.

Using $450 per ton as a selling price and guessing that CNAM paid 1/2 of that to the local suppliers, $225 X 64,000 tons = $14,400,000 of inventory accumulated during qtr 2. Hopefully the scenario is not this bad.

TIA, Jim