Yalian Steel Announces Financial and Operational Results for the Year Ended
September 30, 2009

VANCOUVER, Dec. 22 /CNW/ - Yalian Steel Corporation (TSX-V: YL) ("Yalian" or the "Company") today announced its financial and operating results for the year ended September 30, 2009. Yalian was incorporated in June 2007, 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 months ended September 30, 2009, Yalian reported expenses of $1,123,021 and interest income of $131,995. Net loss for the three-month period was $1,014,769, or $0.01 per share. For the year ended September 30, 2009, Yalian reported expenses totaling $2,285,444, other income of $945,715 ($690,800 from a government grant and interest income of $254,915) and a net loss of $1,339,729 or $0.02 loss per share. After accounting for an unrealized foreign exchange gain of $1,983,705, the comprehensive income for the year was $643,976.

As at September 30, 2009, prepayments for property plant and equipment totaled $3,467,272, property plant and equipment was $56,168,723, cash and cash equivalents were $16,773,236, and working capital position was $9,901,683. The long-term loan with the Agricultural Bank of China, net of financing cost, is $21,936,633 and deferred government grant $5,807,100. Accounts payable and accrued liabilities totaled $7,036,187. Total shareholders' equity was $41,825,945.

Operational and Business Highlights

Yalian has achieved a number of operational and business milestones including:

The construction of the Longitudinally Submerged Arc Welded Pipe ("LSAW") production line commenced in June of 2008 and was completed in October 2009 with Management projecting output for the calendar year 2010 at 110,000 tonnes of LSAW pipes. The plant is designed to eventually produce 150,000 to 200,000 tonnes of LSAW pipes per year.

In December 2008, Yalian completed its qualifying transaction with Yangzhou Yalian, and began trading under the stock symbol "YL" on the TSX Venture Exchange.

In February 2009, the Company was awarded a grant of $863,500 (RMB 5,500,000) from the PRC local municipal government to encourage foreign investment in the city of Yangzhou. The first payment by the local government in the amount of $690,800 was received during the second quarter.

Mr. Ray G. Harris, FCA joined the Yalian board in March 2009. Mr. Harris is an independent business consultant and a fellow of the Institute of Chartered Accountants of Ontario, Alberta, and Saskatchewan. After his retirement from Deloitte & Touche, Mr. Harris has served as an accounting and auditing standards consultant throughout Asia. Mr. Harris is a member of a number of public and private company boards of directors in Canada, including the Bank of China.

Yalian announced in April 2009 that it would assume 100 percent ownership in Yangzhou Yalian Steel Pipe Co. Ltd. ("Yangzhou Yalian") through an agreement with Jiangsu Tongyu Steel Pipe Group Co., Ltd. ("Tongyu") to acquire Tongyu's 15 percent equity interest in Yangzhou Yalian, which owns all the manufacturing assets including land use rights, buildings, and production and plant equipment in Yangzhou. Under the terms of that agreement, Tongyu withdrew its original paid-in capital of RMB 39,957,000 ($6.6 million) from the Yangzhou Yalian joint venture on June 19, 2009 and relinquished its 15 percent ownership in Yangzhou Yalian effective that date. In a separate transaction, Tongyu agreed to subscribe for 5,700,000 common shares of Yalian at a price of US$1.00 ($1.21) per share in a private placement. This transaction was completed on October 27, 2009. With the completion of the withdrawal of Tongyu's 15 percent equity interest in Yangzhou Yalian, Yalian gained full operational control of Yangzhou Yalian while maintaining its working relationship with Tongyu. Yalian will continue to leverage Tongyu's resources, experienced management, established sales relationships, and technical expertise in order to establish and grow its steel pipe business.

In May 2009, Yalian announced that Edward (Bud) M. Siegel, Jr. had joined the Yalian board of directors. Mr. Siegel's career in the steel industry spans over forty years. Most recently, he served as the President and Chief Executive Officer, and a director, of Russel Metals Inc. (TSX: RUS), one of the largest metals distribution and processing companies in North America with revenue in 2008 of approximately $3.4 billion. Subsequent to Mr. Siegal joining the board, Xinduo Yu and Paul Kelly, who have served as Yalian's Chairman and Acting CEO, respectively, since December 3, 2008, stepped down from those positions, and Mr. Siegal was appointed as Chairman and Acting Chief Executive Officer of Yalian. Both Messrs. Yu and Kelly remain as directors of Yalian.

Yalian completed a "bought deal" private placement equity financing on June 19, 2009. The Company issued 5,000,000 common shares (the "Common Shares") at a price of $1.70 per Common Share (the "Offering") to raise aggregate gross proceeds of $8,500,000. GMP Securities L.P. acted as the underwriter in connection with the Offering, and in consideration of its services, received a cash commission of $510,000 and warrants to purchase 300,000 Common Shares at an exercise price of $1.70 (the "Underwriter's Warrants"). The Underwriter's Warrants are exercisable until December 18, 2010. The Common Shares were offered on a private placement basis to Canadian residents who are accredited investors under applicable securities laws, and in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended. Both the Common Shares and the Underwriter's Warrants issued pursuant to the Offering were subject to a hold period of four months until October 20, 2009 in accordance with applicable Canadian securities laws.

On June 17, 2009 the Company completed the arrangements for a RMB170 million ($26.7 million) credit facility with the Agricultural Bank Of China. The Credit Facility carries an interest rate of approximately 5.4 percent, and is repayable in installments over a period up to 4.5 years. As at September 30, 2009, Yangzhou Yalian has received proceeds from loan draw downs of $21,980,000 (RMB140,000,000), which were used to fund the final phase of construction and provide working capital for the Company's LSAW production plant in Yangzhou, Jiangsu Province, China.

Selected Financial Highlights

The following table summarizes the selected annual information from the audited financial statements for the year ended September 30, 2009 and period from February 4, 2008 (inception) to September 30, 2008.

    
    -------------------------------------------------------------------------
                                                        2009            2008
    -------------------------------------------------------------------------
    Total revenue                              $           -   $           -
    Net income (loss) for the period              (1,339,729)       (163,786)
    Basic income (loss) per share                      (0.02)           0.00
    Diluted income (loss) per share                    (0.02)           0.00
    Total assets                                  76,605,865      46,423,017
    Total long-term liabilities and
     deferred government grant                    27,743,733       6,555,044
    Total shareholders' equity                 $  41,825,945   $  39,722,030
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                          Three months ended      Year ended
                                                September 30,   September 30,
                                                        2009            2009
    -------------------------------------------------------------------------
    Interest income                            $     131,995   $     254,915
    Other income (government grant)*               (23,743)        690,800
                                               ------------------------------
                                                     108,252         945,715
    Expenses
      General and administrative                    (744,403)     (1,760,038)
      Interest on long-term loan                    (297,244)       (297,244)
      Amortization and foreign exchange loss         (81,374)       (228,162)
                                               ------------------------------
    Net loss                                      (1,014,769)     (1,339,729)
    Unrealized foreign exchange gain (loss)       (2,216,308)      1,983,705
                                               ------------------------------
    Comprehensive income (loss)                $  (3,231,077)  $     643,976
    Earning per share
      Basic                                    $       (0.01)  $       (0.02)
      Fully diluted                                    (0.01)          (0.02)
    Weighted average number of common shares
      Basic                                       91,850,000      62,055,222
      Fully diluted                               91,850,000      62,055,222
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * The amount of $23,743 is due to the foreign exchange differences on
        the government grant for the last quarter 2009.
    

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 first production line has a capacity of up to 200,000 metric tons per year. 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-80 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.

SOURCE YALIAN STEEL CORPORATION

For further information: For further information: YALIAN STEEL CORPORATION, George Dorin, Acting Chief Financial Officer, Tel. No.: (604) 696-6388

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YALIAN STEEL CORPORATION

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