Jul 19 2007
China Direct, Inc., a company maintaining active, majority stakes in a diversified portfolio of Chinese companies as well as offering consulting services for both private and publicly traded Chinese entities, announced today that the Company received $4,282,500 from the exercise of 1,427,500 of its Class B warrants pursuant to a special offer made by the company on July 9, 2007. The maximum amount of warrants eligible in the offer were exercised in a 3 day period.
The company intends to use $3.35 million of the proceeds to complete the funding of its recently announced acquisition of 52% of Shanxi Jinwei Magnesium Company, Limited ("Jinwei"). Upon completion of the first stage of construction, slated for September of this year, Jinwei will have a production capacity of 12,000 tons of pure magnesium annually. The second stage of construction, will add an additional facility capable of producing an additional 8,000 tons of magnesium per year. It is estimated that Jinwei, when completed, will generate $45 to $55 million in annual sales capacity based on current magnesium price levels. The remaining proceeds coupled with cash flow generated in our operations will be used for working capital and to fund future acquisition opportunities as they arise.
Marc Siegel, President of China Direct, commented, "This warrant exercise was a significant component to our company's expansion plans and we would like to thank our warrant holders for their belief in our company's strategic plan. The acquisition of Jinwei solidifies China Direct's position as a world leader in the production and distribution of pure magnesium. Additionally, these funds will enable us to maintain our opportunistic approach in making accretive acquisitions in China. We are pleased with the strong foundation we have created for continued growth as we position the company for 2008 and beyond."