Expected to initially add 4,700 tons of incremental annual bromine production capacity equating to $9.4 million in revenue and $2.4 million in net income

 

NEW YORK and SHANDONG, China, Jan. 8 /Xinhua-PRNewswire-FirstCall/ -- Gulf Resources, Inc. (the "Company") (OTC Bulletin Board: GFRE - News) a leading producer of Bromine and crude salt in China through its wholly-owned subsidiary Shuoguang City Haoyuan Chemical Company Limited (SCHC), announced today it signed a definitive agreement to acquire substantially all of the assets in the Wei Fang City Hanting area of a bromine producer owned by Mr. Xiaodong Yang. Mr. Yang is not related to the Company's CEO. Total consideration paid by SCHC was approximately $9.7 million.

 

The assets include a 50-year mineral rights and land lease covering 2,641 acres, or 11 square kilometers through December, 2055, which has been paid in the full. The property has 200,000 to 210,000 metric tons of proven bromine reserves. Additional assets to be conveyed with the purchase include the related production facility, wells, pipelines and other production equipment, in addition to the current buildings and other assets on the property. The Company executed an asset purchase agreement with Mr. Xiaodong Yang, the sole owner on January 8, 2008. Mr. Yang is not related to the Company's CEO.

 

The facility is currently operating at 80 percent capacity and produces approximately 4,700 metric tons of bromine annually through 294 wells, which equates to $9.4 million in revenues and $2.4 million in net income at current market prices. In the future, Gulf Resources plans to increase capacity utilization to 85 percent.

 

"The acquisition of facilities in the Wei Fang City Hanting area complements our existing bromine portfolio and provides further confirmation of our team's ability to utilize our valuable exploitation license to complete targeted bromine asset purchases which will serve to both expand our overall reserves and increase our annual production output," stated Ming Yang, CEO, Gulf Resources, Inc. "We continue to pursue new bromine based product introductions which will create a vertically integrated production model giving us key competitive advantage while improving our overall margin profile."

 

The asset purchase is subject to various conditions, including applicable regulatory approvals. Further details on the terms of this transaction can be found in the Company's 8-K which will be filed with the Securities and Exchange Commission.