NOTE 6 - LOANS

Short term loans consist of the following:

	As of
	September 30,		December 31,
	2015		2014

a) Loans payable to CITIC Bank Wuhan Branch		6,295,445		13,016,596
b) Loan payable to Jiang’an Wuhan Branch of Hubei Bank Co		-		3,254,149
c) Loans payable to MinSheng Trust Bank		47,215,840		-

Total short term loans	$	53,511,285		16,270,745

a) Loans payable to CITIC Bank Wuhan Branch with an aggregate amount of RMB 80 million (approximately $13.0 million) consists of three working capital loan contracts originated on April 17, 2014, May 6, 2014 and May 29, 2014, with maturity dates of April 17, 2015, May 6, 2015 and May 29, 2015, respectively. The annual interest rate is 6.9%, 7.2% and 7.2%, respectively. All the loans from CITIC Bank Wuhan Branch were secured by restricted cash of RMB 18 million (approximately $3.0 million). The loan is also secured by 160 kilograms of Au9999 gold, approximately $3 million of which was pledged by Wuhan Kingold. In the second quarter of 2015, Wuhan Kingold paid off loans amounting to RMB 80 million (approximately $13.0 million) on their maturity dates. New loans with an aggregate amount of RMB 40 million (approximately $6.5 million) consists of two working capital loan contracts originated on May 29, 2015 and June 1, 2015, with maturity dates of March 29, 2016 and March 1, 2016, respectively. The annual interest rate of each such loan is 6.72%. All the loans from CITIC Bank Wuhan Branch were secured by restricted cash of RMB 9 million (approximately $1.5 million). In addition, the Company's subsidiary Wuhan Kingold and Mr. Zhihong Jia, Chairman and Chief Executive Officer of the Company, separately signed a maximum guarantee agreement with the bank, to provide a maximum RMB 155 million (approximately $25 million) guarantee for any bank borrowings that Wuhan Kingold borrows from CITIC Bank during May 25, 2015 through May 25, 2016.

b) Loan payable to Bank of Hubei, Wuhan Jiang’an Branch with an aggregate amount of RMB 20 million (approximately $3.3 million) originated on August 26, 2014, with a maturity date of August 26, 2015. The annual interest rate is 6.6%. This loan is secured by the Company’s building and land use rights. The loans were paid off upon maturity.

c) Loan payable to Minsheng Bank Trust Fund, with an aggregate amount of RMB 300 million (approximately $47.1 million) originated on September 17, 2015, with a maturity date of September 25, 2016. The annual interest rate is 12.5%. The loan is to be used for the Company’s working capital. Wuhan Kingold pledged 1,877.4 kilograms of gold valued at RMB 431.8 million (approximately $68 million) at September 30, 2015 to secure this loan.The Company was also required to pledge RMB 3 million (approximately $0.5 million) restricted cash with Mingsheng Bank as collateral. In addition, the Company’s CEO, Mr. Zhihong Jia and his wife, Ms. Lili Huang, jointly signed a guarantee agreement with the bank, to provide a guarantee for the loan.

Interest expense for all of the loans mentioned above for the nine months ended September 30, 2015 and 2014 was $681,866 and $1,539,249, respectively. For the three months ended September 30, 2015 and 2014, it was $299,713 and $577,858, respectively.

Long term loan consists of the following:

	As of
	September 30,		December 31,
	2015		2014

d) Loan payable to Chang’an International Trust Co., Ltd.	$	31,453,618	$	32,517,085
Less current maturities		(31,453,618)		(28,844,777)
Total long term loans	$	-	$	3,672,308

d) On November 29, 2013, Wuhan Kingold entered into a Trust Loan Contract in the amount of RMB 200 million (approximately $31.5 million as of the spot rate on September 30, 2015) with Chang’an International Trust Co., Ltd. (the “Trust Loan”) in order to undertake the aforementioned acquisition of the Jewelry Park project (see Note 5). The Trust Loan was approved on December 3, 2013. The loan has a 24-month term, and bears interest at a fixed rate of 13.5% per annum. Wuhan Kingold pledged 1,000 kilograms of gold valued at approximately $39.2 million at September 30, 2015 to secure this loan. Interest for the Trust Loan in the amount of $3.1 million for the nine months and $0.9 million for the three months ended September 30, 2015 was capitalized into construction in progress and was not recorded as part of total interest expenses. The loan will mature on November 29, 2015 and the Company plans to fully repay this loan upon maturity by using the proceeds received from the Mingsheng Bank Trust Loan (see note c) above).