China Direct to Form its Second Magnesium Joint Venture in Inner Mongolia
April 29 2008 - 9:30AM
PR Newswire (US)
New Venture to Add 12,000 Tons of Annual Magnesium Production
Capacity in 2008 DEERFIELD BEACH, Fla., April 29
/PRNewswire-FirstCall/ -- China Direct, Inc. (NASDAQ:CDS), a U.S.
company that owns controlling stakes in a diversified portfolio of
Chinese entities and assists Chinese businesses in accessing the
U.S. capital markets, has entered into a definitive agreement to
form a new joint venture, Baotou Xinjin Magnesium Co., Ltd.
("Xinjin Magnesium"), as a foreign invested enterprise. Under the
terms of the agreement, China Direct will invest approximately
$7.29 million (RMB 51 million) to obtain a 51% interest in the new
joint venture entity. The investment will be made over the course
of two years; $4.71 million (RMB 33 million) will be made on or
before June 30, 2008, and the remaining balance of $2.57 million
(RMB 18 million) will be contributed within two years of receiving
of final business license approval. The final closing of the
transaction is subject to completion of an independent audit, due
diligence, and applicable regulatory approvals. Management
anticipates that the transaction will close on or before June 30,
2008. Xinjin Magnesium, based in Baotou, Inner Mongolia, China,
presently has an annual production capacity of approximately 6,000
metric tons of magnesium per year. The new joint venture is
expected to complete construction of an additional 6,000 metric ton
magnesium facility by September 2008. Upon that completion, Xinjin
Magnesium will have an annual magnesium production capacity of
12,000 metric tons per year or approximately $40 to $48 million in
annual sales capacity at current market prices. The current
infrastructure of the joint venture permits annual magnesium
production capacity of 18,000 metric tons per year should
management elect to expand capacity. In addition, Xinjin Magnesium
will distribute an additional 4,000 to 5,000 metric tons of
magnesium annually to its existing customer base. Xinjin Magnesium
joins China Direct's growing base of magnesium production
subsidiaries which as of April 30, 2008 were as follows: Annual
Production Name Capacity as of 4/30/2008 Taiyuan Changxin
Magnesium, Ltd. 8,000 metric tons Pan Asia Magnesium Co., Ltd.
12,000 metric tons Shanxi Gu County Golden Magnesium Co., Ltd.
12,000 metric tons Baotou Changxin Magnesium Co., Ltd. 12,000
metric tons (facilities under construction) Commenting on the new
joint venture, Dr. James Wang, Chairman and CEO of China Direct,
stated, "We believe that diversifying our production capacity by
establishing additional operations within Inner Mongolia is
critical to our overall goal of reducing manufacturing costs as we
strive to be among the lowest cost producers in the world. Xinjin
Magnesium, our second venture in the region, joining Baotou
Changxin Magnesium, which is expected to begin production in the
second quarter of 2008, will place a substantial portion of our
overall manufacturing capacity in very close proximity to those
resources necessary for production which should reduce overall raw
material costs." Dr. Wang concluded, "With this new joint venture,
our annual production capacity will increase to 62,000 metric tons
by December 2008. Should worldwide demand for magnesium continue to
exceed supply, our potential expansion plans within our current
operations are capable of attaining a maximum annual production
capacity of 88,000 metric tons by June 2009 with additional capital
investment by China Direct. We are confident that through the
successful completion of this acquisition, China Direct is poised
to become the world leader in the production and distribution of
pure magnesium." About China Direct, Inc. China Direct, Inc.
(NASDAQ:CDS) is a diversified management and advisory services
organization headquartered in the U.S. Our management services
division acquires a controlling interest in entities operating in
China. Our ownership control enables China Direct to provide
management advice, as well as financing to Chinese entities. This
infrastructure creates a platform to expand business opportunities
globally while accessing the U.S. capital markets. Our advisory
services division provides comprehensive advisory and consulting
services to Chinese entities seeking to access the U.S. capital
markets. As a direct link to China, China Direct serves as a
vehicle allowing investors to directly participate in the rapid
growth of the Chinese economy in a diversified and balanced manner.
For more information about China Direct, please visit
http://www.chinadirectinc.com/ . Safe Harbor Statement This news
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward- looking statements are based on current expectations or
beliefs, including, but not limited to, statements concerning the
Company's operations, financial performance and, condition. For
this purpose, statements that are not statements of historical fact
may be deemed to be forward-looking statements. The Company
cautions that these statements by their nature involve risks and
uncertainties, and actual results may differ materially depending
on a variety of important factors, including, but not limited to,
the impact of competitive products, pricing and new technology;
changes in consumer preferences and tastes; and effectiveness of
marketing; changes in laws and regulations; fluctuations in costs
of production, and other factors as those discussed in the
Company's reports filed with the Securities and Exchange Commission
from time to time. In addition, the company disclaims any
obligation to update any forward-looking statements to reflect
events or circumstances after the date hereof. DATASOURCE: China
Direct, Inc. CONTACT: Investor Relations, Alan Sheinwald, Partner,
of HC International, Inc., +1-914-669-0222, ; Company, Richard
Galterio, Executive Vice President of China Direct, Inc.,
+1-877-China-57, Web site: http://www.chinadirectinc.com/
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