AMENDMENT TO DEBT REDUCTION AGREEMENT

This Amendment (this “Amendment”) is made and entered into as of February 20,
2007 by and among China Precision Steel, Inc., a Colorado corporation (the
“Company”), Partner Success Holdings Limited, a British Virgin Islands Business
Company (“PSHL”), and Mr. Wo Hing Li, a Hong Kong national (“Li”), on the basis
of the terms and conditions set forth herein. Capitalized terms not otherwise
defined herein have the meaning set forth in the Debt Reduction Agreement, dated
as of February 13, 2007 (the “Agreement”), among the Company, PSHL and Li.
 
WHEREAS, the parties entered into that certain Debt Reduction Agreement on
February 13, 2007 (the “Agreement”); and
 
WHEREAS, the parties consider it appropriate to make certain amendments to the
Agreement as set forth below;
 
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, the parties agree as follows:
 
1.
Amendment.

 

 
1.1
Effective as of the date hereof, section 2 of the Agreement is amended in its
entirety to read as follows:

 
The Conversion Amount shall be converted (the “Conversion”) by the Company into
such number of shares (the “Shares”) of Common Stock, to be issued to Li or his
designees, as shall be determined pursuant to a price per share equal to that of
the Common Stock sold in a Placement (the “Purchase Price”), such Conversion to
be effected upon Company shareholder approval (the “Closing”); provided,
however, that no Conversion shall be required to be effected hereunder if the
aggregate amount of gross proceeds payable at Closing to the Company is less
than $19,000,000; provided further that no such shareholder approval shall be
required if Mr. Li, in his sole discretion, effects such Conversion at the
closing bid price of the Common Stock on The NASDAQ Capital Market as determined
on the business day prior to such Conversion.
 

 
1.2
Effective as of the date hereof, section 5 (iii) of the Agreement is amended in
its entirety to read as follows:

 
The Tuorong Consideration, after deduction therefrom for the amount of the
Dividend Rescission, shall be converted (the “Second Conversion”) into such
number of shares of Common Stock, to be issued to Li or his designees, at a
price per share that is the greater of (i) the Purchase Price, as defined in
paragraph 2 above, and (ii) the closing bid price of the Common Stock as
reported on The NASDAQ Capital Market as determined on the business day prior to
such Second Conversion.
 

 
1.3
In all other respects, the Agreement is hereby confirmed in its entirety.

 
 

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2.
Representations and Warranties. Each of Company, PSHL, and LI represents and
warrants to each other as follows:

 

 
2.1
Corporate Authority and Power. It has all requisite power and authority to enter
into this Amendment.

 

 
2.2
Authorization of Agreements. The execution and delivery of this Amendment and
the performance of the Agreement have been duly authorized by all necessary
action.

 
3.
Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the State of New York, without regard to conflict of laws
principles.

 
4.
General. Except as expressly set forth herein, the Agreement remains unmodified.
The Agreement (as amended from time to time) is confirmed as being in full force
and effect. This Amendment and the Agreement referred to herein or therein
constitute and supersede all prior and current understanding and agreements,
whether written or oral, with respect to such subject matter. This Amendment may
be executed in any number of counterparts, which together shall constitute one
instrument, and shall bind and inure to the benefit of the parties and their
respective successor and assigns.

 
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CONFORMED COPY

IN WITNESS THEREOF, THIS AGREEMENT is duly executed as of the date set forth
above.
 

CHINA PRECISION STEEL, INC.     WO HING LI                  By :  /s/ Leada Tak
Tai Li     /s/ Wo Hing Li

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Name: Leada Tak Tai Li    

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Wo Hing Li Title: Chief Financial Officer      

 

PARTNER SUCCESS HOLDINGS LIMITED                       By:  /s/ Shu Keung Leung
     

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Name: Shu Keung Leung     Title: Director      

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