China Direct Industries in Definitive Agreement to Sell Its 51% Stake in Shanxi Pan Asia Magnesium Company for $3 Million in Cash

China Direct Industries, Inc. CDII announced today that as of August 8, 2011 it has entered into a definitive agreement to sell its 51% stake in Shanxi Pan Asia Magnesium Company ("Pan Asia") for $3.05 million in cash to Bloomgain Investment Company, Ltd. ("Bloomgain"), a privately held British Virgin Island company. The agreement was reached through the cooperation of Mr. Haixin Zhao, and the other minority shareholders of Pan Asia, as a resolution to the dispute between the parties. China Direct has withdrawn the arbitration application filed with the China International Economic and Trade Arbitration Commission and will not pursue any legal actions with regard to Pan Asia, and confirms to release Mr. Zhao Haixin, Shanxi Jinyang Coal and Coke Group Co. Ltd. and Mrs. Runlian Tian from any future claims that may have resulted from this dispute from now on. Management anticipates the sale, which is subject to certain closing conditions, will take place in the near future and anticipates using the proceeds to expand its magnesium operations in China and its U.S. based commodities trading operations as it continues to ship iron ore to China from Mexico and begin shipments from South America.