Factoring

To: Wu YI-Director of Documentary
Bank of Communications
From: Young Fan
President and CEO
Young's Refractory Materials Inc.
Date: July 12,2002
Re: Factoring

Dear Mr. Wu Yi,

Enclosed please find a full set documents for an amount of US $ 3,816,800.00 under L/C No. 57013490485 for the product of DEAD-BURNED MAGNESITE 9110 against S/C No. NMM06280001. Please go over the following documents and help us avoid any possible discrepancies though Mr. Long has checked the documents. Your double check will fully secure the safe collection. The documents presented according to the L/C are as follows:

1.One original commercial invoice No. 00245 and four copies.
2.An original on board ocean bill of lading No. 88823423 and three copies by PENAVICO.
3.One origin certificate GSP form A No. 1343234 and four copies issued by Committee of China Promotion of International Trade.
4.One original weight certificate No. 908938 and three copies issued by CCIC at Bayuquan loading port.
5.One quality certificate origin No. 7420984 and four copies by SGS.

We shall have the 90% of the amount (RMB ￥28,339,740.00= US $3,435,120.00×8.25) of the capital converted form US dollars to Renminbi at the current listed rate while we submit you the full set shipping documents. We hope having the equivalent amount swire to our account within the next two working days. We need this factoring and the working capital.

Your full cooperation shall be highly appreciated.

Best regards,

Young Fan
President and CEO
Young's Refractory Materials Inc.