Android: chroot: can't execute /system/bin/sh

I'm trying to install Linux on android according to this guide: http://ift.tt/UbP8jr threw all the necessary files to the memory card. The problem is when it has a file bootubuntu:

#modprobe ext2
busybox mount -o remount,rw -t yaffs2 /dev/block/mtdblock3 /system
export kit=/sdcard/ubuntu
export bin=/system/bin
if [ ! -d /data/local/ubuntu ]
then
mkdir /data/local/ubuntu
fi
export mnt=/data/local/ubuntu
export PATH=$bin:/usr/bin:/usr/sbin:/bin:$PATH
export TERM=linux
export HOME=/root
mknod /dev/loop1 b 7 0
losetup /dev/block/loop1 /sdcard/ubuntu/ubuntu.img
mount -t ext4 /dev/block/loop1 /data/local/ubuntu
#mount -o loop,noatime -t ext2 $kit/ubuntu.img $mnt
mount -t devpts devpts $mnt/dev/pts
mount -t proc proc $mnt/proc
mount -t sysfs sysfs $mnt/sys
sysctl -w net.ipv4.ip_forward=1
echo "Setting /etc/resolv.conf to Google Open DNS 8.8.8.8 and 8.8.4.4"
echo "nameserver 8.8.8.8" > $mnt/etc/resolv.conf
echo "nameserver 8.8.4.4" >> $mnt/etc/resolv.conf
echo "Setting localhost on /etc/hosts "
echo "127.0.0.1 localhost" > $mnt/etc/hosts
echo "READY TO ROCK AND ROLL BABY! "
echo "Brought to you by NexusOneHacks.net and the open source community! "
echo " "
chroot $mnt /system/bin/sh

#After exit command is executed clear it all up
echo " "

echo "Shutting down Ubuntu"
umount $mnt/dev/pts
umount $mnt/proc 
umount $mnt/sys 
umount $mnt
losetup -d /dev/loop1

Got an error when calling chroot: can not execute '/system/bin/sh': no such file or directory

Despite this, the file exists, I checked to ls -la /system/bin/sh

What to do?