Arehada Mining Limited Announces Delay in Filing Its 2010 Annual Financial Statements and Application for Management Cease Trade Order

TORONTO, ONTARIO--(Marketwire - March 31, 2011) - Arehada Mining Limited (the "Company" or "Arehada") (TSX:AHD) announced today that it will not be in a position to file its audited financial statements as at and for the year ended December 31, 2010, accompanying management's discussion and analysis, related CEO and CFO certifications and Annual Information Form (collectively, the "2010 Annual Filings") within the 90 day period prescribed for the filing of such annual filings under Parts 4, 5 and 6 of National Instrument 51-102 and pursuant to National Instrument 52-109, respectively. Arehada presently expects to be in a position to file the 2010 Annual Filings on or before May 31, 2011.

The delay stems from the delay in accessing the sale proceeds from sale of Arehada's subsidiary in China pursuant to a February 11, 2010 agreement between the Issuer's wholly-owned subsidiary, Arehada (Barbados) Corporation and Shanjin Mining Corporation ("Shanjin"), a Shandong based Chinese mining company, to sell all of the shares Arehada (Barbados) Corporation holds in Arehada Mining Corporation ("Arehada China"), the Chinese operating subsidiary, to Shanjin. The final cash purchase price was RMB 735 million (approximately Cdn$109 million). 

After having obtained certain required approvals and met other conditions precedent, the share transfer registration was completed on November 11, 2010. Arehada (Barbados) Corporation, however, has not yet obtained the release of the sale proceeds paid to date, currently in the aggregate amount of RMB260.7 million (approximately Cdn$38.6 million), representing the first two installments and 45% of the aggregate cash purchase price from the joint account set up by Shanjin and Arehada (Barbados) Corporation. The reason is that the Chinese tax authorities have not yet decided on the applicable tax rate (the maximum tax rate expected to be 25%) to be applied to and deducted from the sale proceeds, as a result of Arehada (Barbados) Corporation being a foreign entity. As at the date of this press release, the Company is still actively pursuing a resolution of this matter with the Chinese tax authorities and expects that the decision will likely be made by the end of April. The disposition of the matter, however, is not in the Company's control.

Because the Company has sold its principal business and does not yet have access to the sale proceeds paid to date, the Company has suffered from lack of liquidity, which has delayed the audit and filing of the audited annual financial statements of the Company for the year ended December 31, 2010. However, the Company's majority shareholders have advanced funds to the Company by way of a non-interest bearing shareholder loan in the amount of RMB 2 million (approximately Cdn$300,000) in order for the Company to pay outstanding accounts. The shareholder loan will be repaid by the Company upon the release of the sale proceeds. The Company will be unable to file the audited 2010 annual financial statements, along with the other 2010 Annual Filings, on or prior to the filing deadline, and will thereafter be in default of its continuous disclosure obligations under applicable securities laws. 

In connection with the foregoing and in accordance with National Policy 12-203, Arehada has filed an application with applicable regulatory authorities for a management cease trade order. There is no certainty that such order will be granted. The applicable regulatory authorities may issue cease trade orders against Arehada for failure to file the 2010 Annual Filings within the prescribed time period.

Arehada confirms that it intends to satisfy the provisions of the alternative information guidelines found in sections 4.3 and 4.4 of National Policy 12-203 for so long as it remains in default as a result of late filing of its continuous disclosure. During the period of default, Arehada will issue bi-weekly default status reports in the form of further press releases which will also be filed on SEDAR. Arehada confirms that there are no insolvency proceedings against Arehada as of the date herein. 

In addition, the TSX issued a letter to the Company on December 16, 2010 advising that the TSX is reviewing the Company with respect to whether it meets the continued listing criteria, in particular, relating to the Company ceasing to be actively engaged in ongoing business and change of business. Since the Company has sold its principal business, the TSX requires the Company meet the original listing requirements. As requested by the TSX, the Company's written submissions to the TSX will be filed as required. 

Other than as disclosed herein, Arehada also confirms that there is no material information concerning the affairs of Arehada that have not been generally disclosed as of the date herein.

Forward Looking Information

The above contains forward looking information that is subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in our forward looking statements. Factors that could cause such differences include: changes in world commodity markets, costs and supply of materials relevant to the mining industry, extent of resources actually contained in mineral deposits, actual recoveries achieved in processing ore, technological change, change to regulations affecting the mining industry, risks associated with mining operations in China, environmental and safety regulations risks, and risk associated with failure to obtain required regulatory or third party consent. Generally, forward looking information can be identified by the use of forward looking terminology such as "plans", "expects", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information in this release include statements regarding the Company's sale to Shanjin Mining Corporation, the effectiveness of the purchase agreement between Arehada (Barbados) Corporation and Shanjin Mining Corporation, the fulfillment of the conditions set out in the purchase agreement, and the decision to be made by the Chinese tax authorities. Although we believe the expectations reflected in our forward looking information are reasonable, results may vary, and we cannot guarantee future results, levels of activity, performance or achievements. Readers should not place undue reliance on forward looking information.