Item
1.01 Entry into a Material Definitive Agreement
On
December 22, 2018, Adamant DR Processing and Minerals Group (the “Company,” “we” and “us”)
entered into an Exchange Agreement (the “Exchange Agreement”), among the Company, certain of its subsidiaries and
16 shareholders of the Company holding in the aggregate 53,782,198 shares of the Company’s common stock (the “Exiting
Shareholders”). Pursuant to the Exchange Agreement, the Company transferred all of the outstanding shares of its subsidiary,
Haixing Huaxin Mining Industry Co., Ltd., a limited company organized under the laws of the People’s Republic of China (“China
Huaxin”), to the Exiting Stockholders in exchange for 48,403,969 shares of the Company’s common stock.
China
Huaxin owns a DRI iron ore production facility (“DRI Facility”) in Haixing County, Hebei Province, about 50 km from
the nearest port. The total amount expended to construct the DRI Facility, inclusive of both hard and soft costs, was approximately
244,270,000 RMB or US $39 million. Due to various clean initiatives of different governmental entities in China having jurisdiction
over the DRI Facility, the Company was never able to commence full scale production at the DRI Facility. As a result of the consummation
of the Exchange Agreement, the Company no longer has an interest in China Huaxin or any of its assets, including the DRI Facility.
The
foregoing summary of the Exchange Agreement is qualified in its entirety by reference to the full text of the Exchange Agreement,
which is filed as exhibit 10.1 to this Report.
On December 22, 2018,
the Company, certain of its subsidiaries and the Exiting Shareholders also entered into a Termination Agreement (the “Termination
Agreement”). Pursuant to the Termination Agreement, the Company, Zhuolu Jinxin Mining Co., Ltd., a limited company organized
under the laws of the People’s Republic of China (“China Jinxin”), Zhangjiakou Tongda Mining Technologies Service
Co., Ltd., a limited company organized under the laws of the People’s Republic of China (“China Tongda”),
and the Exiting Shareholders terminated the series of agreements known as variable interest entity agreements, or VIE Agreements,
pursuant to which the Company acting through China Tongda, controlled the operations of China Jinxin and was to receive the economic
benefits of the operations of China Jinxin.
China Jinxin has an iron
ore concentrate production line with an annual capacity of 300,000 tons and associated plant and office buildings in Zhangjiakou,
Hebei Province. As a result of various clean initiatives of different governmental agencies in China having jurisdiction over
the production facilities of China Jinxin and the Company’s inability to obtain more than a temporary permit to operate
the facilities, the Company has been unable to maintain full scale production at the facilities for any significant
length of time.
As a result of the termination
of the VIE Agreements, control of China Jinxin reverted to the Exiting Shareholders and the Company no longer has any influence
over the operations of China Jinxin or any interest in its assets or the results of its operations. In consideration for the termination
of the VIE Agreements, the Company received an aggregate of 5,378,219 shares of its common stock.
The foregoing summary
of the Termination Agreement is qualified in its entirety by reference to the full text of the Termination Agreement, which is
filed as exhibit 10.2 to this Report.