Note 3. ADVANCES TO SUPPLIERS

The Company’s advances to suppliers are as follows:

	September 30,		June 30,
	2016		2016

Freight fees (a)	$	3,610,846	$	2,192,910
Others		4,497		-
Total	$	3,615,343	$	2,192,910

(a) On June 10, 2016, the Company entered into a Memorandum of Understanding (“MOU”) with Singapore Metals & Minerals Pte Ltd. (the “Buyer”) and Galasi Jernsih Sdn BHD (the “Seller”), whereby the Buyer will be the bauxite purchaser for the 3,000,000 MT/year, subject to the results of the tests satisfying the Buyer’s requirements. Both the Buyer and the Seller agree that the Company shall be appointed as general agent to handle logistics and transportation including ocean shipping and inland transportation for both sides, and all door to door transportation services for the shipping of the bauxite to be sold by the Seller and to be purchased by the Buyer as referenced in this MOU. On the same day, the Company signed a supplementary agreement with the Buyer, which states the Company should assist the Buyer in handling transportation service from the source mine to dock to help the Buyer to fulfill the delivery favorably and close the deal smoothly. The Company agrees to make advance payments for freight charges on behalf of the Buyer. As of September 30, 2016, the ending balance of this prepayment was $3,610,846. The Company expects the related advance payments will be recognized as cost of sales during the next 12 months.