Low Cost Structure and High Quality Product

The mines have low estimated operating cost structure because of:

• open pit mining
• relatively stable iron content of the ore
  • Tangezhuang property 16.29 to 21.83%TFe
  • Heshanpo property 16.11 to 31.50%TFe
• close proximity of the mines to the tailing dam
• dedicated on-site processing facilities which allow economical transportation to loading points
• proximity to customers
• the existence of a highly developed highway networks
• the access to a large base of relatively low cost and highly skilled mining workforce
• Management believes that the production cost can be further reduced upon commissioning of the new concentrators
• Through a three-stage crushing and a two-stage magnetic separation process, saleable iron concentrates with an average grade of 62% to 66% iron can be produced; the iron concentrates can be sold at a higher price when the grading of iron concentrates is higher.