Yalian Steel Announces Third Quarter Financial and Operational Results

VANCOUVER, Aug. 27 /CNW/ -- 
      TSX-V:YL
    

      VANCOUVER, Aug. 27 /CNW/ - Yalian Steel Corporation (TSX-V: YL) today
      announced its consolidated financial and operating results for the three
      and nine month periods ended June 30, 2010. The "Company" or "Yalian"
      refers to Yalian Steel Corporation (formerly China Drill Corporation)
      and its subsidiary, Yangzhou Yalian Steel Pipe Co. Ltd "Yangzhou Yalian"
      which operates primarily within the People's Republic of China ("PRC").
      The Company completed its qualifying transaction and began trading as a
      public company in December 2008. Yalian reports its results in Canadian
      dollars, as reported here, unless otherwise stated.
    

      For the three month period ended June 30, 2010, Yalian reported revenues
      of $211,527; cost of sales of $316,100; expenses of $680,262 and other
      loss of $276,707 (comprising a foreign currency exchange loss of
      $300,754 and interest income of $24,047). Net loss for the three month
      period was $1,061,542, or $0.01 per share. After accounting for an
      unrealized foreign currency translation gain of $2,514,778, the
      comprehensive income for the period was $1,453,236.
    

      For the nine month period ended June 30, 2010, Yalian reported revenues
      of $524,609; cost of sales of $673,261; expenses of $2,611,314 and other
      income of $169,487 (comprising government grants of $228,900, a foreign
      currency exchange loss of $176,104 and interest income of $116,691). 
      Net loss for the nine month period was $2,590,479, or $0.03 per share. 
      After accounting for an unrealized foreign currency translation loss of
      $28,405, the comprehensive loss for the period was $2,618,884.
    

      As at June 30, 2010, cash and cash equivalents were $12,028,033,
      inventory was $1,408,730, prepaid expenses were $8,934,528, other amount
      receivable was $3,657,192, prepayments for property plant and equipment
      totaled $6,234,222, property plant and equipment was $54,460,418 and the
      Company's working capital position was $15,335,439. The long-term loans,
      net of financing costs, were $33,662,000 and deferred government grant
      was $5,786,120.  Accounts payable and accrued liabilities totaled
      $1,955,216.  Total shareholders' equity was $45,495,147.
    

      Operational and Business Highlights
    

      During the three and nine month periods ended June 30, 2010, Yalian
      achieved a number of operational and business milestones including:
    

      In February 2010, Yangzhou Yalian received approval from the American
      Petroleum Institute for certification and license registration of "5L
      X-70 Grade" for its high grade steel large diameter pipe mill and is in
      the process of applying for additional certification of X-80 grade and
      higher.
    

      In March 2010, Yangzhou Yalian received an A1 Grade production license
      from the State General Administration of the PRC for Quality
      Supervision, Inspection and Quarantine.  The "A1 Grade" is the highest
      production license available and permits Yangzhou Yalian to manufacture
      LSAW pipes for all grades of steel to be manufactured and sold within
      the PRC. By the end of March 2010, Yangzhou Yalian had received all of
      its required permits, licenses and industry certifications necessary to
      commence operations in China.
    

      For the quarter ended June 30, 2010, the Company manufactured and
      delivered additional test orders and continued to focus its efforts on
      the development and expansion of its sales and marketing activities
      within China.  The Company's focus during the quarter has been to build
      strategic alliances with major state owned oil & gas companies within
      the PRC to develop and be accepted into key purchasing networks.  During
      the quarter, the Company qualified and was added to the pre-approved
      natural gas vendor lists for Hubei and Jiangsu provinces and is in the
      process of being qualified and added to the natural gas vendor list for
      Guangdong province.  The Company also continues to build relationships
      with a number of major international trading companies and is working to
      expand its distribution network within the PRC and abroad.  The Company
      also completed the planning and engineering phase of its new
      anticorrosion line and placed orders with various suppliers to procure
      the necessary materials and equipment.  The project is expected to cost
      approximately $5,300,000 and is expected to be completed in early
      calendar year 2011.
    

      Subsequent to June 30, 2010, the Company voluntarily repaid the USD
      $2,000,000 ($2,121,200) unsecured term loan.
    

      For more detailed information, please refer to the Company's filings on
      SEDAR at www.sedar.com.
    

      About Yalian Steel Corporation
    

      Yalian Steel Corporation is a British Columbia corporation focused on
      the production of high quality Longitudinally Submerged Arc Welded
      (LSAW) steel pipe to service Asia's rapidly growing energy
      transportation infrastructure market. The Company has recently completed
      construction of its initial manufacturing facility in city of Yangzhou,
      in the Jiangsu province of China. The Company's production line has a
      rated capacity of up to 200,000 metric tons per year, depending on
      product and mix specifications. The Yangzhou Yalian plant utilizes the
      JCOE (J-ing, C-ing, O-ing, Expanding) process, an advanced method of
      LSAW pipe production that involves the bending and shaping of X-70 and
      higher grade steel.
    

      For further company information please access our website:
      www.yaliansteel.com
    

      Neither the TSX Venture Exchange nor its Regulation Services Provider
      (as that term is defined in the policies of the TSX Venture Exchange)
      accepts responsibility for the adequacy or accuracy of this press
      release.
    

      This press release contains forward-looking statements based on
      current expectations. These forward-looking statements entail various
      risks and uncertainties that could cause actual results to differ
      materially from those reflected in these forward-looking statements.
      Risks and uncertainties about Yalian's business are more fully discussed
      in the Company's disclosure materials filed with the securities
      regulatory authorities in Canada. All amounts are stated in Canadian
      dollars unless noted otherwise.
    



pYALIAN STEEL CORPORATION/p pMurray G. Flanigan, Chief Financial Officerbr/Tel. No.: [phone]/p

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