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China Direct Industries Inc. F2Q10 (Qtr End 03/31/2010) Earnings Call Transcript

Richard Galterio

Thank you operator, and all of you who are joining us for our fiscal 2010, second quarter conference call. China Direct Industries recorded revenue of $23.4 million for the 2010, second quarter, and I’m pleased to report that we returned to profitability in this quarter with net income of $1.7 million. This compared to a net loss of $1.5 million in the comparable period in 2009.

We continue to see positive overall gross margins in our various business segments, with our efforts to align our costs with our current revenue base, resulting in a significant improvement in overall works margins in both basic materials and magnesium in China, as well as our consulting operations compared to 2009 period.

Our efforts have resulted in earnings per basic and diluted share of $0.06, up from a loss of $0.06 in the comparable period last year. I am also pleased to report that we are seeing a market pick-up in activity in all of our segments, particularly in magnesium and consulting. We are confident that we will see continued improvements throughout fiscal 2010, as momentum continues to build in these segments, as well as in our chemical operations within our basic materials segment.

In our magnesium segment, I would like to highlight several important churns. First, volume output at our current magnesium operations was 4,215 metric tons. This was up 55% from the same period in 2009. Second, volumes also increased by 19% on a sequential basis from the first quarter of 2010.

Third, quoting activity has increased not only in number of quotes, but also in quantities quoted; and lastly, prices have continued to show a gradual improving trend, with signs that inflationary pressures are building further. Taking these factors into consideration, we have elected to reinitiate production at two facilities, which will increase our current production capacity more than three fold.

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