Armco Metals Holdings Inc. announced that the Company has received a credit approval letter from a Chinese commercial bank with an approved credit limit equivalent to RMB 96 million or $15 million, of which $7.5 million can be used for general purposes such as Import Letters of Credit and Import Bill Advances, and the other $7.5 million can be used for special business purposes such as secured business loans. The new credit facility became effective on May 16, 2014 and is in effect for a period of 12 months and replaced the facility of RMB 78 million or $12.7 million with the same bank. Under the terms of the credit approval letter, Armco Metals Holdings can utilize the credit facility to finance the purchase of numerous raw materials.

This facility differs from others that Armco Metals has in place in that it allows for the financing of scrap metal in addition to Chrome Ore, Manganese Ore, Nickel Ore, Copper Ore, and Galena Ore. While the recent pricing environment for scrap metal has been challenging, according to historic data, the profit margin for scrap metal has generally fluctuated between 7% and 19% which is normally around 10%. Even during the current weakness in the steel industry, the supply chain is currently suffering from a shortage of both scrap steel and scrap metals.

Armco Metals Holdings has previously used its own cash flow to fund its metal scrap business severely limiting the Company's ability to scale its operations. In addition to the implementation of the Company's 'platform strategy', where customers share in sourcing costs of scrap metals, this credit approval will allow Armco Metals to purchase scrap metals with 20% of the cargo value as a deposit. The Company believes this additional leverage will greatly improve its supply capabilities and support up to $20 million in additional revenue capacity to help us grow market share in the Chinese raw materials industry.