Gulf Resources, government of Weifang City announces compensation agreement
Gulf Resources announced that one of the Company's subsidiaries Shouguang City Haoyuan Chemical Company Limited, or 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 $2.68M 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.