MIRA INFORM REPORT

Report Date :

26.02.2007

IDENTIFICATION DETAILS

Name :	shandong minmetals co., ltd.
Registered Office :	No. 32, Hong Kong Middle Road, Qingdao City Shandong Province 266071 Pr
Country :	China
Financials (as on) :	31.12.2005
Date of Incorporation :	04.07.1999
Com. Reg. No.:	3702031802249
Legal Form :	Limited Liabilities Company
Line of Business :	Selling hardware and minerals.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	Up To usd 80,000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

name & address

shandong minmetals co., ltd.

NO. 32, HONG KONG MIDDLE ROAD, QINGDAO CITY

SHANDONG PROVINCE 266071 PR CHINA

TEL: 86 (0) 532-85755662

FAX: 86 (0) 532-85755568

EXECUTIVE SUMMARY

INCORPORATION DATE : jul. 4, 1999

REGISTRATION NO. : 3702031802249

REGISTERED LEGAL FORM : limited liabilities company

CHIEF EXECUTIVE : Mr. wang yuanqing (chairman)

STAFF STRENGTH : 70

REGISTERED CAPITAL : CNY 10,000,000

BUSINESS LINE : trading

TURNOVER : cny 310,310,000 (AS OF DEC. 31, 2005)

EQUITIES : CNY 12,670,000 (AS OF DEC. 31, 2005)

PAYMENT : AVERAGE

RECOMM. CREDIT RANGE : up to usd 80,000 (PERIODICAL REVIEW)

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY STABLE

OPERATIONAL TREND : steady

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 7.75 = US$1 AS OF 2007-02-07

Adopted abbreviations:

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Ren Min Bi

SC was registered as a limited liabilities company at local Administration for Industry & Commerce (AIC-The official body of issuing and renewing business license) on Jul. 4, 1999.

Company Status: Limited liabilities co.

This form of business in PR China is defined as a legal person. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to extent of its total assets. The characteristics of this form of co. are as follows:

Upon the establishment of the co., an investment certificate is issued to the each of shareholders.

The board of directors is comprised of three to thirteen members.

The minimum registered capital for a co. is listed as follows:

-manufacturing co. : CNY 500,000.00

-trading &wholesaling co. : CNY 500,000.00

-retailing co. : CNY 300,000.00

-consultancy & service co. : CNY 100,000.00

Shareholders may take their capital contributions in cash or by means of tangible assets or intangible assets such as industrial property and non-patented technology.

Cash contributed by all shareholders must account for at least 50% of the registered capital while contribution by intangible assets must not exceed 20% of the registered capital.

Existing shareholders have pre-exemption right to purchase shares of the co. offered for sale by the other shareholders and to subscribe for the newly increased registered capital of the co.

SC’s registered business scope includes selling hardware, rigging, and minerals; importing and exporting commodities and technologies; processing with imported material, and compensation trade, barter trade & transiting trade; dispatching staff in engineering, manufacturing, and service industry; renting houses; and international freight agency.

SC is mainly engaged in selling hardware and minerals.

Mr. Wang Yuanqing has been chairman of SC since 1999.

SC owns about 70 staff at present.

SC is currently operating at the above stated address, and this address houses its operating office in the commercial zone of Qingdao. Our checks reveal that SC rents the total premise about 1,000 square meters.

http://www.sdmmiec.com The design is professional and the content is well organized. At present, the web is both in Chinese and English versions.

E-mail: office@sdmmiec.com

In 2005, SC has obtained the international standard of ISO9001:2000.

MAIN SHAREHOLDERS:

Name % of Shareholding

Qingdao Double-peak Operation Corp. 5

The Staff Union Committee of Shandong Minmetals Co., Ltd. 52

Other individuals 43

l Chairman and General Manager:

Mr. Wang Yuanqing, in his 50’s with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 1999 to present Working in SC as chairman and general manager.

l Assistant Manager:

Mr. Chen Zhiqiang, in his 40’s with university education. He is currently responsible for the daily management of SC.

Working Experience(s):

From 1999 to present Working in SC as assistant manager.

SC is mainly engaged in selling hardware and minerals.

SC’s products mainly include: cement, pencil stone, bauxite, ferrous metal, and rigging, etc.

SC’s brands include: “Double-peak”, “SDM”, “Q”, and “T”, etc.

SC sources its materials 80% from domestic market, mainly Shandong province, and 20% from overseas market; SC sells its products 90% to overseas market, mainly European and American countries, and 10% in domestic market, mainly Shandong province.

The buying terms of SC include T/T, L/C and Credit of 30-60 days. The payment terms of SC include T/T, L/C and Credit of 30-60 days.

SC is not known to have any subsidiary at present.

Overall payment appraisal :

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience : SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record : None in our database.

Debt collection record : No overdue amount owed by SC was placed to us for collection within the last 6 years.

Constructions Bank Qingdao Branch

AC#: N/A

Relation: Normal

Balance Sheet (as of Dec. 31, 2005)

Unit: CNY’000

Cash & bank	10,310
Inventory	7,490
Accounts receivable	8,770
Other Accounts receivable	610
Accounts payable in advance	6,790
To be apportioned expense	1,640
Other current assets	9,320
	------------------
Current assets	44,930
Fixed assets	35,920
Long term investment	0
Other assets	5,530
	------------------
Total assets	86,380
	=============
Short loans	12,620
Accounts payable	42,240
Accounts receivable in advance	0
Other Accounts payable	17,930
Salaries payable	0
Welfares payable	650
Taxes payable	260
Withdraw the expenses in advance	0
Other current liabilities	10
	------------------
Current liabilities	73,710
Long term liabilities	0
Other liabilities	0
	------------------
Total liabilities	73,710
Equities	12,670
	------------------
Total liabilities & equities	86,380
	=============

Income Statement (as of Dec. 31, 2005)

Unit: CNY’000

Turnover	310,310
Cost of goods sold	295,380
Sales expense	13,690
Management expense	7,090
Finance expense	-1,050
Non-operating income	6,790
Profit before tax	1,990
Less: profit tax	680
Profits	1,310

Important Ratios (as of Dec. 31, 2005)

=============================

*Current ratio 0.61

*Quick ratio 0.51

*Liabilities to assets 0.85

*Net profit margin (%) 0.42

*Return on total assets (%) 1.52

*Inventory /Turnover ×365 9 days

*Accounts receivable/Turnover ×365 10 days

*Turnover/Total assets 3.59

*Cost of goods sold/Turnover 0.95

PROFITABILITY: AVERAGE

l The turnover of SC appears fairly good in its line.

l SC’s net profit margin is acceptable.

l SC’s return on total assets is acceptable.

l SC’s cost of goods sold is fairly high, comparing with its turnover.

LIQUIDITY: FAIR

l The current ratio of SC is maintained in a fair level.

l SC’s quick ratio is maintained in a fair level.

l The inventory of SC is maintained in a normal level.

l The accounts receivable of SC is maintained in a normal level.

l The short-term loan of SC appears LARGE.

l SC’s turnover is in a fairly good level, comparing with the size of its total assets.

LEVERAGE: FAIR

l The debt ratio of SC is fairly high.

l The risk for SC to go bankrupt is above average.

Overall financial condition of the SC: Fairly stable.

SC is considered medium-sized in its line with fairly stable financial conditions. A credit line up to USD 80,000 would appear to be within SC’s capacities upon a periodical review basis.

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions