Gulf Resources, Inc. (Nasdaq:GURE) ("Gulf Resources" or the
"Company"), a leading manufacturer of bromine, crude salt,
specialty chemical products, and natural gas in China, today
announced updates on the rectification of its bromine business.
On September 1, the Company announced it received notification
from the government of Yangkou County, Shouguang City that
production at its factories and mines had to be halted in order for
the Company to perform “rectification and improvement in accordance
with the country's new safety, environmental protection
requirements.”
Since that time, the local government organized the Safety
Supervision and Administration Department and the Environmental
Protection Departments conducted inspections of every bromine
production enterprise within its jurisdiction, in order to improve
security, environmental protections, pollution, and safety.
The Company has been working closely with the County authorities
to develop rectification plans for both its bromine and its
chemical businesses. The Company and the government have now agreed
on a plan for Haoyuan Chemicals, the Company’s bromine business,
which includes the following:
- The coal boilers should be dismantled. The “conversion of coal
to electricity” and “conversion of coal to gas” or the connection
to the centralized pipe network should be carried out.
- Positions related to chlorine should all adopt automatic
control (or remote control). Emergency cut-off devices should be
provided for liquid chlorine vaporization. Video monitoring and
toxic gas alarms should be set as required and should be in normal
operation.
- Emergency facilities for leakages regarding above-ground
storage tanks should be provided (collecting pool, cofferdam,
receiving tank, dumping pump, etc). It is encouraged to use
underground storage tanks. For each storage tank, high level alarms
and high level interlocking shut-off valves should be provided as
required. Meanwhile, liquid level detectors should be
installed.
- Hardening should be carried out for site road, unloading area,
device area, storage tank area and gasification area of liquid
chlorine storage. It is encouraged to carry out hardening for the
entire site.
- All pipes inside the plant area should be buried or
above-ground pipe supports should be adopted. Cables should be
placed inside pipes and pipe supports should be used. Related
labels and flow direction should be marked clearly. It is forbidden
to place cables in a disordered way.
- Anticorrosion should be carried out for all devices, pipes,
valves and flanges inside the plant without any terrible rust.
Related caution labels should be suspended and posted as required.
Misuse, hanging in a disordered way and damage are forbidden.
- Attention should be paid to the cleanness and greening inside
the plant. Leakage is strictly forbidden.
- Aqueducts and crude salt pans of some mining areas should be
modified again to strengthen the leakage prevention and prevent
underground brine and waste water from polluting surrounding
farmland. Leakage prevention should be checked each year and
updated on a regular basis.
- In case the related crude salt pan of the bromine factory
cannot consume the waste water generated by the factory,
negotiation should be made with surrounding enterprises.
After the rectification is completed, the County
will entrust relevant governmental supervisory departments and
safety and environmental experts to conduct a joint inspection. We
may start production again if we pass the inspection, otherwise
production shall be halted until the rectification has been
approved. If the Company fails inspection twice, we will be forced
to close the factories according to law.
The Company believes the new environmental policies are very
important for the quality of life in China. While the measures the
Company must take to implement the policies are costly and time
consuming, the Company believes they are essential. It also
believes that in the end, the Company’s position in the bromine
business will be significantly strengthened, as many smaller and
unlicensed competitors may be unable to pass inspections or to
finance needed improvements.
Gulf Resources is committed to undertaking and completing all of
the rectification steps which the Company believes will cost
approximately US$35 million. The Company believes that the
rectification for all of the bromine business will be completed and
that operations will recommence by the end of March 2018.
However, the Company will try its best to implement the
measures quickly to commence production for part of its bromine
factories before this date.
At this time, the government has not issued plans for the
Company’s chemical business. Because the factories of chemical
business are located in residential areas, the government may need
longer time to formulate its plans and make a decision. The Company
is in discussions with the government to arrive at a rectification
plan for its chemical business. As soon as it receives the
government’s detailed plan, it will begin developing its strategy
and communicate with investors.
In Sichuan, the Company has found a solution for the waste
water, and it will continue to resolve the technical drilling
issues for its natural gas project.
Financial Implications
Since September 2017, all of the bromine and chemical operations
have been closed. We expect that these operations will be closed
during the entire fourth quarter of 2017. As a result, the Company
will report reduced earnings for the third quarter of 2017 and a
loss for the fourth quarter of 2017. The Company is currently
reviewing the financial implications and will report to investors
in the near future.
Gulf Resources would like to reiterate to investors that as of
June 30, 2017, the Company had more than US$176 million in cash.
This cash will enable Gulf to make the improvements in its bromine
business as well as any improvements that may be required for its
chemical and natural gas businesses.
Mr. Liu Xiaobin, the CEO of Gulf Resources, stated, “Sometimes
events that appear to be bad news are actually great opportunities.
We are obviously disappointed that our factories and mines had to
be closed and that our earnings for 2017 will be disappointing.
However, we believe the government is doing the right thing by
taking strong steps to improve the environment. Our management is
working extremely closely with the local authorities to resolve all
of these issues are quickly as possible.”
“We further believe,” Mr. Liu continued, “this could turn out to
be a very exciting business opportunity for Gulf. We believe our
mines and factories have had generally higher quality standards
than those of most of our competitors. We believe that unlicensed
competitors may be permanently closed and that smaller competitors
may not have the capital to upgrade. We may have opportunities to
purchase these competitors at a comparable cheaper price. In
addition, with fewer competitors, we expect that utilization and
profitability in our industries could increase. Over the long-term,
we believe our earnings power may increase as well. With our very
large cash position, we should be able to rectify our factories,
make acquisitions, develop our natural gas project, and also
enhance shareholder value.
“We will continue to communicate with our shareholders,” Mr. Liu
continued, “as we gain more visibility as to the cost and the
timing of the rectification program in bromine and the plans for
the similar program in chemicals.”
About Gulf Resources, Inc. Gulf Resources, Inc.
operates through three wholly-owned subsidiaries, Shouguang City
Haoyuan Chemical Company Limited ("SCHC"), Shouguang Yuxin Chemical
Industry Co., Limited ("SYCI"), and Daying County Haoyuan Chemical
Company Limited (“DCHC”). The company believes that it is one of
the largest producers of bromine in China. Elemental Bromine is
used to manufacture a wide variety of compounds utilized in
industry and agriculture. Through SYCI, the company
manufactures chemical products utilized in a variety of
applications, including oil and gas field explorations and
papermaking chemical agents, and materials for human and animal
antibiotics. DCHC was established to further explore and develop
natural gas and brine resources (including bromine and crude salt)
in China. For more information,
visit www.gulfresourcesinc.com.
Forward-Looking Statements
Certain statements in this news release 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 general economic and business
conditions in the PRC, future 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 other oilfield and power production
chemicals, changes in technology, the ability to make future
bromine asset purchases, and various other factors beyond its
control. All forward-looking statements are expressly qualified in
their entirety by this Cautionary Statement and the risk 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.
CONTACT: Gulf Resources, Inc.
Web: http://www.gulfresourcesinc.com
Director of Investor Relations
Helen Xu (Haiyan Xu) beishengrong@vip.163.com
Gulf Resources (NASDAQ:GURE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Gulf Resources (NASDAQ:GURE)
Historical Stock Chart
From Sep 2023 to Sep 2024