Gulf Resources, a manufacturer of bromine, crude salt, and specialty chemical products in China, has announced that it will increase its bromine and crude salt manufacturing capacity as the result of a planned acquisition in the province of Shandong.

 

The expansion is the result of an agreement by one of Gulf Resources wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited, which has signed an agreement with three individual Chinese citizens — Fenqiu Yuan, Han Wang, and Yufen Zhang — to acquire manufacturing assets involved in the production of bromine and crude salt production.

 

Upon the closing of the transaction by January 30, 2009, SCHC will acquire the buildings, wells, machinery, equipment, pipelines, power circuits, and inventory owned by the three sellers, a, in Shouguang City Renjiazhuangzi Village North Area. The filing process for the Company to obtain 50-year land use rights for the Property is currently underway. Following the successful closing of the acquisition, the Company expects to start production utilizing the newly purchased assets in April 2009.

 

The assets have been purchased for USD10 million in cash, and the issuance of shares of common stock valued at USD1.5 million.

 

Ming Yang, CEO of Gulf Resources stated that although the assets are not currently operational, it was anticipated that the acquisition of these assets, together with the implementation of Gulf Resources' marketing and distribution systems and utilization of its operating rights, would result in an additional annual production capacity of 3,000 tons of bromine and 200,000 tons of crude salt, expanding the consolidated annual production capacity of SCHC to 34,000 tons of bromine and 300,000 tons of crude salt. He added that given the limited number of bromine properties left on the market, GR's management believed that to continue to be competitive in the industry they need to act quickly to emerge as a front-runner as the industry consolidates

 

The closing of the transaction is subject to certain closing conditions, including a final assessment of the condition of the assets.