Yalian Steel Corporation Assumes 100% Ownership in Yangzhou Yalian Joint Venture



    VANCOUVER, April 20 /CNW/ - Yalian Steel Corporation (TSX-V: YL)
("Yalian" or the "Company") announced today that it has entered into an
agreement with Jiangsu Tongyu Steel Pipe Group Co., Ltd. ("Tongyu"). Tongyu
has a 15% equity interest in Yangzhou Yalian Steel Pipe Co. Ltd. ("Yangzhou
Yalian"), the Company's 85% joint venture subsidiary that owns all the assets
including land rights, buildings, and production and plant equipment in
Yangzhou, Jiangsu Province, China. Under the terms of the agreement, Tongyu
will withdraw its original paid-in-capital of US$5,700,000 from the Yangzhou
Yalian joint venture and relinquish its 15 percent ownership in Yangzhou
Yalian to Yalian. As a result, the Company will assume 100% ownership in the
Yangzhou Yalian joint venture. In a separate transaction, Tongyu will then
subscribe for 5,700,000 common shares of Yalian at a price of US$1.00
(CAD$1.21) per share in a private placement. Upon completion of the private
placement, Tongyu will hold approximately 6 percent of the Company's issued
and outstanding shares on a fully diluted basis. The private placement is
subject to the receipt of all necessary approvals, including the approval of
the TSX Venture Exchange. Proceeds from the private placement will continue to
be applied to Yangzhou Yalian to complete the construction of the Company's
steel pipe plant and for working capital and general corporate purposes. The
shares issued to Tongyu pursuant to the private placement will be subject to a
4 month hold period in accordance with applicable securities laws.
    With the completion of the withdrawal of Tongyu's 15% equity interest in
Yangzhou Yalian, Yalian will gain full operational control of Yangzhou Yalian
while maintaining its working relationship with Tongyu. In addition, Tongyu's
private placement to Yalian further aligns its interest with the shareholders
of the Company. 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.
    "We are very pleased to have a partner like Tongyu, who is committed to
working with us to build a strong foundation for our future growth," stated
Paul Kelly, Acting CEO of Yalian. "Their technical know-how, operational
experience, and industrial network are invaluable, especially in the early
stages of our corporate development. We look forward to their continued
participation and support."
    The construction of Yangzhou Yalian's project is running smoothly per the
original schedule. The main facility has been closed to receive the major
manufacturing equipment to be installed in April through June. The Company
expects to commence equipment testing in July 2009, and to start the system
linkage empty-load testing on or about August 31, 2009.

    About Yalian Steel Corporation

    Yalian Steel Corporation is a British Columbia corporation which
currently holds an 85% equity interest in Yangzhou Yalian Steel Pipe Co., Ltd.
("Yangzhou Yalian"), a sino-foreign equity joint venture which is constructing
its first steel pipe plant for the manufacture of longitudinal submerged arc
welded ("LSAW") pipes in Yangzhou, Jiangsu Province, China. The Yangzhou
Yalian plant will use an advanced process of production of LSAW pipes that
involves the bending and shaping of X80 grade steel by progressively moving
and expanding from shapes that follow the patterns of the letters "J", "C",
and "O".





For further information:

For further information: YALIAN STEEL CORPORATION (formerly "China Drill
Corporation"): Hong (Iris) Duan, Chief Financial Officer, Tel. No. (604)
696-6388

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YALIAN STEEL CORPORATION

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