- Additional capacity expected to begin contributing to revenues in 4Q 2010
ZHENGZHOU, China, July 28 /PRNewswire-Asia-FirstCall/ -- China Gerui Advanced Materials Group Limited (Nasdaq: CHOP) ("China Gerui," or the "Company"), a leading niche and high value-added steel processing company that utilizes advanced technology to produce specialty steel products in China, today provided an update on its production capacity expansion plan.
As previously announced, by December 2011, the Company plans to double its existing production capacity to 500,000 tons per annum, and increase its chromium plating capability to 250,000 tons per annum, covering 50% of its total annual steel production capacity. Phase I of the expansion plan is the construction of two new cold-rolled wide-strip steel production lines with 150,000 tons of total annual capacity and a chromium plating line capable of processing 200,000 tons of cold-rolled steel per annum. The Company expects total capital expenditures for Phase I of $42 million, of which approximately 65% has been spent to date. The foundation for the building housing the two new cold-rolled steel production lines is expected to be completed by the end of July 2010; the building is expected to be completed by mid-August 2010; and the two cold-rolling machines are expected to be completed by October 2010. The acid pickling, annealing, and temper rolling facilities relating to the Company's new steel production lines are expected to be completed by the end of September 2010. As for the chromium plating line, the building to house this line is expected to be completed by September 2010; installation is currently underway; testing is scheduled for mid-September 2010; and the line is expected to be ready to begin production in mid-October 2010. The chromium plating line can handle both narrow and wide-strip cold-rolled steel.
For Phase II of the project, the Company expects to construct a third cold-rolled wide strip steel production line with 100,000 tons of capacity by the end of the third quarter of 2011. The Company expects the capital expenditures for Phase II to total $12 million.
"We are very pleased with the progress of our expansion project," said Mr. Mingwang Lu, Chairman and Chief Executive Officer. "Our existing production facilities continue to run at near full capacity and so we very much look forward to having additional cold-rolling capacity and chromium plating capability come online later this year. While projects with similar size and technical complexity as our Phase I expansion usually take almost two years to complete, we expect ours to be ready in less than twelve months. Our June 2010 and November 2009 capital raises, together with our internally generated cash, have provided us with additional resources to finance our expansion plan and to accelerate the build-out of the 200,000-ton chromium-plating line from 2011 to 2010.
"We believe that our new facilities will enable us to sell high quality and higher margin wide strip products. Our business continues to benefit from the fact that the demand for the end uses of our finished steel products are driven by the domestic Chinese economy in areas that continue to exhibit robust growth such as consumer electronics, food and beverage packaging, and telecommunications cable and equipment. In addition, although there may be a surplus capacity of raw steel in China, there is still a domestic shortage of the type of high precision cold-rolled steel products that we produce. With our new capacity, we will be able to continue to provide our customers with the ability to replace imports with our domestically made products, which we believe are of the same quality but at lower cost. In addition, we believe that we will be able to meet the increasing demand from our customers for both narrow and wide-strip cold-rolled steel for a wider range of end applications."
About China Gerui Advanced Materials Group Limited
China Gerui Advanced Materials Group Limited is a leading niche and high value-added steel processing company that utilizes advanced technology to produce specialty steel products in China. The Company produces high-end, high-precision, ultra-thin, high- strength, cold-rolled steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. China Gerui's products are not standardized commodity products. Instead, they are tailored to customers' requirements and subsequently incorporated into products manufactured for various applications. The Company sells its products to domestic Chinese customers in a diverse range of industries, including the food packaging, telecommunication, electrical appliance, and construction materials industries. For more information, please visit http://www.geruigroup.com .
Safe Harbor Statement
Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include, among others, those concerning the offering, our expected financial performance and strategic and operational plans, our future operating results, our expectations regarding our ability to meet payments related to Phase I of our expansion program, the new production line, statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward- looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 20-F for the year ended December 31, 2009 and otherwise in our SEC reports and filings, including the final prospectus for our offering. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.
For more information, please contact:
Company Contact:
Email: investors@geruigroup.com
Website: http://www.geruigroup.com
Investor Relations Contact:
CCG Investor Relations
Mr. Athan Dounis
Phone: +1-646-213-1916
Email: athan.dounis@ccgir.com
