omniture

Gulf Resources Announces Asset Purchase of Dong Ying City Liu Hu Area

2007-06-11 20:18 1044

Acquisition of 2,318 acres is expected to yield approximately 3,700 tons of

annual bromine production equating to $6.85 million in revenue and $1.8

million in net income

LOS ANGELES and SHENZHEN, China, June 11 /Xinhua-PRNewswire/ -- Gulf

Resources, Inc. (the "Company") (OTC Bulletin Board: GUFR) a leading producer

of Bromine and crude salt in China through its wholly-owned subsidiary

Shuoguang City Haoyuan Chemical Company Limited (SCHC), announced today that

on June 8, 2007 it completed an asset purchase agreement with Dong Hua Yang,

an individual who controls bromine production property in the Dong Ying City

Liu Hu area, for approximately $6.7 million in total consideration.

The key asset includes a 50-year property lease covering approximately

2,318 acres, or 9.38 square kilometers, which is located in close proximity to

SCHC. The lease is paid in full through maturation on April 30, 2052. The

property maintains proven reserves of approximately 235,000 tons of bromine.

Additional assets to be conveyed in this purchase include the existing bromine

production infrastructure, wells, pipelines, power circuits, and other

equipment, as well as the existing buildings on the property. The property

and assets carry a book value of approximately $7.5 million, which management

believes is approximately seventy percent of the current market value.

The facility is currently producing approximately 3,700 tons of bromine

annually, which equates to $6.85 million in revenues and $1.8 million in net

income at current market prices and is operating at 69 percent capacity

utilization. Gulf Resources plans to invest approximately $3.3 million in new

equipment and property improvements during 2007. These improvements are

expected to increase overall production output by 21.6 percent to more than

4,500 tons of bromine annually with a target plant utilization rate of between

84 to 89 percent.

"The acquisition of the Dong Ying City Liu Hu area is expected to increase

SCHC's overall bromine production output by approximately 24 percent to over

19,100 tons annually, and salt production by approximately 23.4 percent to

97,500 tons annually and be accretive to 2007 earnings," stated Ming Yang, CEO

of Gulf Resources, Inc. "This acquisition is consistent with our stated plan

to acquire and consolidate local bromine producers while expanding our

collective production capacity and overall output. As the government continues

to closely monitor unlicensed operators, the bromine production and

distribution licenses we maintain have enabled the Company to purchase new

reserves at attractive valuations while providing owners with a way to

monetize under utilized assets, a true win-win for both parties. In addition,

this acquisition is expected to increase our proven bromine reserves to

approximately 1.05 million tons. Given the long duration of these associated

land leases, we are building a recurring business model with attractive

margins and strong cash flow, which management expects will drive significant

shareholder value in the coming years."

Consideration for the asset purchase includes approximately $4.6 million

in cash at closing, a promissory note for approximately $900,000 and 409,795

shares of restricted Gulf Resources (GUFR) common stock valued at $941,300

based on a stock price of $2.30 per share.

This acquisition was completed on June 8, 2007 and further details on the

terms of this transaction can be found in the Company's 8-K to be filed with

the Securities and Exchange Commission on June 11, 2007.

Gulf Resources, Inc.

Gulf Resources, Inc. operates through two wholly-owned subsidiaries: SCHC

which is engaged in manufacturing and trading Bromine and Crude Salt in China.

Bromine is used to manufacture a wide variety of bromine compounds used in

industry and agriculture, and SYCI which manufactures and sells chemical

products utilized in oil & gas field explorations and as papermaking chemical

agents. For more information, please visit http://www.gulfresourcesco.com.

Safe Harbor Statement:

Certain statements in this news release may contain forward-looking

information about Gulf Resources and its subsidiaries business and products

within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6

under the Securities Exchange Act of 1934, and are subject to the safe harbor

created by those rules. The actual results may differ materially depending on

a number of risk factors including, but not limited to, the following: the

ability of Gulf to complete the asset purchase of Dong Ying City Liu Hu area,

the general economic and business conditions in the PRC, product development

and production capabilities, shipments to end customers, market acceptance of

new and existing products, additional competition from existing and new

competitors for bromine and crude salt, changes in technology, and various

other factors beyond its control. All forward-looking statements are expressly

qualified in their entirety by this Cautionary Statement and the risks factors

detailed in the Company's reports filed with the Securities and Exchange

Commission. Gulf Resources undertakes no duty to revise or update any forward-

looking statements to reflect events or circumstances after the date of this

release.

Investor Relations Contact:

Ethan Chuang (310) 470-2886

Ethan@gulfresourcesco.com

Matthew Hayden

HC International, Inc.

(858) 704-5065

matt@haydenir.com

Source: Gulf Resources, Inc.
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