NOTE 3 – INVENTORIES

Inventories as of December 31, 2016 and December 31, 2015 consisted of the following:

	As of
	December 31,		December 31,
	2016		2015
Raw materials (A)	$	7,167,391	$	162,766,249
Work-in-progress (B)		78,813,685		108,276,834
Finished goods (C)		33,454,519		27,260,102
Total inventory	$	119,435,595	$	298,303,185

(A)

Included 185,000 grams of Au9999 gold as of December 31, 2016 and 5,624,476 grams of Au9999 gold as of December 31, 2015.

(B)

Included 2,358,178 grams of Au9999 gold as of December 31, 2016 and 3,549,984 grams of Au9999 gold as of December 31, 2015.

(C)

Included 993,699 grams of Au9999 gold as of December 31, 2016 and 886,849 grams of Au9999 gold as of December 31, 2015.

As of December 31, 2016, no inventory was pledged on the debts payable because it has been fully repaid upon maturity and accordingly previously pledged inventory has been released (see Note 13).

As of December 31, 2015, 3,977,490 grams of Au9999 gold with carrying value of approximately $115.1 million were pledged for certain bank loans and another 2,456,000 grams of Au9999 gold with carrying value of approximately $72.29 million were pledged for the Company’s debts payable.

No lower of cost or market adjustment was recorded at December 31, 2016 and 2015, respectively.