Gulf Resources And The Government Of Weifang City Announce A Demolition Compensation Agreement For Factory #6 Of Shouguang City Haoyuan Chemical Company Limited.

SHOUGUANG, China, Nov. 28, 2016 (GLOBE NEWSWIRE) -- Gulf Resources, Inc. (Nasdaq:GURE) ("Gulf Resources" or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in China, today announced that one of the Company's subsidiaries Shouguang City Haoyuan Chemical Company Limited (SCHC) signed the demolition compensation agreement for its factory #6 with the Yangzi Street Office of Weifang City Binhai Economic-Technological Development Zone.

To improve the environment and increase tourism, the government of Weifang City has created the Taiwan Island Ecological Culture City Project in its Binhai Economic-Technological Development Zone. SCHC's Factory #6 is located within this zone. In order to complete this project, the government and SCHC have reached a Demolition Compensation Agreement whereby the government will pay SCHC approximately USD$2,678,989 (based on the current exchange rate) for the demolition of Factory #6.  This amount is expected to be roughly slightly above the current book value of its fixed assets. SCHC will receive 60% of the funds within five days since signing the agreement and the remainder within five business days since the acceptance by construction unit. It is a relatively common experience in China for governments to acquire property for tourism, housing, infrastructure, and other uses and compensate the impacted companies accordingly.  

Factory #6Factory #6 is in a different geographic region than Gulf's other factories. Gulf believes that none of its other factories may be impacted by government actions in the foreseeable future.

Factory #6 contains 2,641 acres. It was acquired on January 8, 2008 with the total purchase price of USD$9,722,222. In 2015, Factory #6 had bromine capacity of 4.539 tons (10% of SCHC's total). Production was 1,914 tons (10% of total). Sales were 1,944 tons (10% of total). The utilization ratio was 42%, slightly above the corporate average of 40%. Factory #6 also produced 36,500 tons of crude salt (11% of total). Details regarding Factory #6 are presented in Gulf Resources Annual Report on 10-K.

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