Gulf Resources, Inc.

Greetings. Welcome to the Gulf Resources third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Helen Chu. You may begin.

Thank you, operator. Good morning, ladies and gentlemen, and good evening for those of you joining us from the U.S. And we'd like to welcome all of you to GovResources' third quarter 2023 conference call. I'm Helen Xu, the IR Director. Our CEO of the company, Mr. Shelby Liu, also joining this call today. I'd like to remind you to all our listeners that in this call, certain maintenance statements during the call will contain forelooking information about Gulf Resources Incorporation and its subsidiaries' business as a product 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. Actual results may differ from those discussed today, taking into account a number of risk factors, including, but not limited to, the general economic and business condition in the PRC, the risks associated with the pandemic outbreak, future product development and production capabilities, shipments to end customers and the market acceptance of new and existing products, additional competition from existing and new competitors from the bromine and the other oil fields and the power production chemicals, changing technology, the ability to make future bromine assets and the various other sectors beyond the company's control, all four looking statements are expressly qualified in their entirety by this cautionary statement and the risk factors detailed within the company's report filed with the SEC. Gulf Resources assumes no obligation to revise or update any forelooking statement to reflect events or circumstances after the date of this call. Accordingly, our company believes the expectations reflected in those forelooking statements are reasonable and there can be no assurance of such will prove to be correct. In addition, any reference to a company's future performance represents the management's estimates as of today, the 20th of November, 2023. For those of you unable to listen to the entire call at this time, A replay will be available at the company's website. The call is also accessible through the webcast and the link is accessible through our website. So please locate our press release issued earlier for the details. Before focusing on the major content of this conference call, we'd like to briefly discuss the proposed change in our chairmanship. Mr. Yang founded our company, and Mr. Liu joined the company in 2007 and became CEO in 2009. Mr. Yang, who has investments in many companies in Shandong Province, has decided not to stand for re-election as chairman at the annual meeting on November 30, 2023. The board has nominated Mr. Liu to serve as our next chairman. I would also like to refer to a recent press release discussing our flood prevention plan. As we issued earlier that in year 2018, Shougang City experienced the devastating impact of typhoon Rivia, regarded as one of the most destructive typhoons in history, resulting with the region receiving 14.9 inches of rainfall. The overflow of three major reservoirs along the Minghe River led to extensive flooding in farmlands, residential rooms, and industrial factories. All of the company's plumbing factories, crude salt tanks, and mining areas were seriously impacted. The company incurred substantial expenses, amounting for more than $40 million, including the write-offs and the road repairs, equipment replacement, Crusade Perry construction, and the re-dreaming of flood wells. A year later, the typhoon Lekima struck Shogun City again, suppressing the destructive force of its prestigious predecessor. Once again, the company had to spend more than $6 million rectify the aftermath involving the road repairs, equipment replacement, construction, and the drilling of affected wells. So to mitigate the similar damages in the future, the company had commenced a flood prevention initiative. Our strategy involved the renovation of the channels of four major rivers within our mining area. encompassing the tributary of Mihe River. The aim is to prevent flooding that could harm the wells, aqueducts, and cruise oil tanks at our plant. The projected expenditure for this initiative amounts to approximately $50.5 million. As of this quarter, ending by September 30, 2023, the company disbursed amounted approximately 15.15 million for the initial phase of this project. Apart from reducing risk to surrounding regions, we anticipated that there are three notable advantages from this flood prevention plan. It is expected to firstly enhance the probability of obtaining approvals to reopen factories number two and number 10. Secondly, enable the trading of additional wealth across our five operating factories. And number three, mitigate the risk and associated expenses related to future stops induced flooding. Given the company's current financial position, and its substantial cash resources, the company believes that the flood prevention plan will yield favorable returns over the long term to the company. So now let's turn to the results of the third quarter and the nine months. During the third quarter, the sales declined by 74%. Net income after tax was a loss of approximately $1.8 million compared to a profit approximately of $9.0 million. Net loss per share was $0.17 compared to a net profit of $0.86. Shareholders' equity was approximately $260.8 million or $24.99 per share. So the results for the three months ended September 30, 2023. In the third quarter of 2023, revenue declined by 74% to approximately $5.9 million from approximately $22.9 million. Especially, the booming revenues declined by 75% to approximately $4.9 million from approximately $19.8 million. The decrease in this net revenue was primarily due to the reduction in the volume of tons sold for 43% and a 57% decrease in the average selling price of bromine. During the quarter, the average selling price was $3,237 compared to $7,474. As of November 13, 2023, based on the sensors.com data, the price of bromine has seen an increase of approximately 7.4% to $3,477. The decrease in selling price of bromine reflects both economic weakness in China and an excess inventory of anticipatives Following the aftermath of COVID, a reduction in tonnage sold reflects the company's strategic decision not to engage in a price competition, aiming to safeguard the long-term value of its resources. Additionally, crude salt revenues declined by 70% due to an 18% decline in pricing and a 63% decrease in tons produced. As crude salt is a byproduct of bromine, the decreased production of bromine resulted in a reduction in production of crude salt as well. There were no revenues generated from our chemical products business yet, while our natural gas business obtained approximately $68,000 in revenues through its equipment leasing. Gross profit for the quarter was amounted to a loss, of $508.0 billion compared to a profit of approximately $14.5 million in the previous year. Especially, our Bromley business suffered a gross profit loss of approximately $1.1 million compared to a profit of $12.5 million, while Cruz Salt achieved a gross profit of $511,500 compared to $1.9 million previously approximately. The company incurred direct labor and factory overheads amounting to approximately 1.0 during the planned shutdown compared to approximately 1.9 previously. General administrative expenses were approximately $762.9 thousand compared to $584.5 thousand previously. Consequently, a loss from operations was amounted to approximately $2.3 million compared to a profit of approximately $11.9 million in a period priori. The net income after tax was a loss of approximately $1.8 million compared to a profit of approximately $9.0 million. And the net loss per share was 17 cents compared to a net profit of 86 cents. Results for the nine months ended September 30, 2023. Revenues over the nine months declined by 51%, decreasing of approximately $23.2 million from approximately $47.5 million. Specially, roaming revenue also fell by 51% from approximately $20.7 million from approximately $41.9 million. Notably, there was a 9% increase in bromine toll sold, reflecting the addition of Faction 8. However, despite this, the gross profit margin decreased to 7%, down from 57%. Throughout the nine months, the average selling price of bromine was $3,493. per ton compared to the previous of 7,674 per ton. Revenues from crude salts also declined by 51% to approximately $2.3 million from approximately $5.5 million. While the production volume declined by 51%, no revenue was generated from chemical business yet. Conversely, revenue from natural gas increased by 13% from the equipment's leasing. The gross profit for nine months totaled approximately $2.7 million compared to $26.4 million. to approximately $27.7 million in the previous period. Our crude salt business achieved a gross profit of approximately $1.0 million compared to approximately $2.6 million. Meanwhile, the chemical business recorded no gross profit and the natural gas business marked a gross profit of approximately $150,000 compared to approximately $132,600 previously. The company incurred direct labor and factory overheads during the planned shutdown amounted to approximately $4.5 million compared to approximately $6.0 million in the previous period. General and administrative expenses were approximately $2.3 million compared to approximately $3.4 million as previously. As a result, our loss from operations were amounted to approximately $4 million compared to a profit of $17.0 million as previously. Net income was a loss of approximately $3.0 million compared to a profit of $12.7 million previously, and the net loss per share was $0.29 compared to a profit of $1.22. Cash flow during the nine months ended by September 30, 2023, we generated approximately $9.9 million from operating activities and invested approximately $15.2 million primarily in our flood protection program. Balance sheet, end of September 30th, 2023. Our cash balance was approximately $103.8 million based on the shares issued and outstanding ended by September 30th, 2023. they're translated to $9.95 in cash per share. The net net cash, which is cash minus all liabilities, worth $8.21 per share. Working capital worth approximately $10.07 per share. Shareholders' equity worth 260.7 million dollar approximately or 24.99 per share so now let me turn the call over to miss liu for his um additional commentary hello

Hello, everyone.

Hello, everyone.

I am Liu Xiaobin, CEO of the company. First of all, I would like to welcome everyone to participate in the third quarter of the third quarter of the third quarter of the third quarter of the 2023 year. In the third quarter, our performance was negatively affected by the decline in the price of embroidery. We attribute the decline in price to two main reasons. First, China's construction market is in a low state, which leads to a reduction in the purchase volume of Xiu-Su used for incineration. Second, the big wave of COVID-19 has affected the weakening, which has led to a reduction in the demand for Xiu-Su due to medical equipment and bacteria. Despite facing these challenges, our company is still optimistic about Xiu-Su's long-term supply balance. We expect that the demand for Xiu-Su products will resume. including new products, new and old batteries, and new medical products, providing opportunities for continuous growth. However, the supply of new products is still limited. It is worth noting that according to the data produced in 2022, we estimate that more than 2.75% of the global production of new products will be distributed in Israel, and Ukraine. These areas are currently facing military conflict or war. In the face of the current market situation, we have taken a cautious strategy. We are pushing for the approval of the second and tenth market projects. Because we are waiting for the return of the price, In addition, we have pushed for the final purchase and delivery of our chemical factory equipment, until we have a clearer recognition of the opportunity to extend the number of products. We have reduced the sales scale, and we expect that the sales of the future sales will bring higher returns. Since this quarter, we have observed that the market price of shale is gradually and continuously rising. We are closely monitoring the situation in the Middle East region. Any interruption in the West China Sea region may suddenly change the market dynamics. Looking forward to the future, we expect that in the next few quarters, So here is the remark from Mr. Xiaobin Liu, the company CEO. First of all, I'm the company CEO, Mr. Xiaobin Liu.

Welcome all of you to attend the Gulf Resources third quarter 2003 earnings conference call. In the third quarter, our results were adversely impacted by the diminished price of bromine. We attribute this drop in price to two major factors. First, the sluggish state of the construction market in China led to reduced purchase of bromine. for fire retardant application. Secondly, the warming impact of COVID pandemic resulted in decreased demand for bromine in medical instruments and sterilization. Despite these challenges, our company remains optimistic about the long-term equilibrium of bromine's demand and supply. We still continue We anticipate a research in demand of bromine-based products, emerging products such as zinc and bromine batteries, and new medical products present opportunities for sustained demand growth. However, the supply of bromine continues to be constrained. Notably, based on 2022 production data, We estimate probably over 75% of global bromine production is concentrated in regions like Israel, Jordan, and Ukraine, which currently face military conflicts or wars. We adopt a prudent strategy in navigating the market. We have held back seeking approvals to open section number two and number 10, as we await improved pricing. Additionally, we have postponed the procurement of the final equipment of our chemical factories until we give clear insights into opportunities for derivative raw materials products. We have scaled back our sales, anticipating higher returns from future bromine sales. Since the end of the quarter, we have observed a gradual but consistent uptick in the market price of bromine. We are monitoring the events in the Middle East, recognizing that any disruption in the Dead Sea region could suddenly alert the market dynamics. Looking ahead, They envision returning to profitability in the forthcoming quarters. Moreover, we aim to progress with the opening of our chemical factory, obtaining approvals for our remaining two bromine factories, and ideally resuming our natural gas and brine exploration in Sichuan Province. Now we are open for the question and answer section. Hi, John.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Once again, that's star one if you have a question or a comment. The first question comes from Elaine. She is a private investor. Elaine, please proceed.

Yes, good morning. Good morning, Elaine. Good morning, management. Given what happened in Q3, I have a couple of questions. My first question is, could you explain why there was a delay in the 10-Q filing in Q3? Yes, sir.

Hello? Yes, hi.

This quarter's delay in filing was because that auditors, they need, you know, more documents or materials when they're doing their reviews.

But yeah, that's, yeah. Okay. I, it's not a fully audited quarter. It's not like a 10 K. So I'm curious to know, okay, what we're concerned about in a quarterly filing, but, uh, okay. So the auditors are the reason why you had some delay. Uh, my second question, if you don't mind, my second question is regarding this, um, uh, flood, uh, prevention investments. And, uh, I, Sheldon has already mentioned in the past that definitely we wanted the company to consider some action to mitigate the risk of flooding, and I think that's great. We're happy about that. The only thing that surprised us is that we learned that last minute, so I don't know when the decision was taken, but to learn last minute that we have a $50 million investment and that already $15 million has been spent in Q3, that was kind of a surprise to shareholders. So when was the decision taken to make this $50 million investment?

President Liu, the second question is for Aaron. He saw the company's anti-pandemic policy This is the announcement of this project, including information disclosure. It's about this. For example, this project with more than 50密链, he thinks it can be understood, that is, in order to protect the company, the company gave the company, including the two times before, this typhoon called the company again. But on the third record, there are 15密链 of this expenditure. He wants to know when the company made the final decision to do this? This was in September of the third quarter. Hi, Alec. It was during, you know, the September in Q3.

Oh, September. And you were able to spend $15 million in September. Okay.

No, no, no. I mean the decision. You mean the final decision when was it made?

Yeah, the decision to plan, I mean to spend $15 million. When was the decision made? It was... Okay. I just find it that Shareholders find it interesting that we just learned about it and suddenly we are told $15 million has already been spent. So we would have liked to have a little more of a warning, okay, when you have made the decision to do this investment. Okay, just a comment. The big question is how much do you expect to spend in Q4 of this $15 million? 那就是说接下来这个第四季度的时候公司预计会花多少?

Maybe in Q4, the rest of the projects will be spent.

That's $35 million, approximately.

$35 million in Q4. Okay. Okay. Thank you for the information. The last point is regarding the bull mine pricing and market. You have restricted production in Q3 because the price went pretty low. It was a very low price at the beginning of Q3. Are you still restricting production in Q4? How do you expect to go to full production in Q4? Whatever is full production, okay? Because it's winter, so I know it's not as high as in the summer.

Okay. Okay. Okay.

First of all, we believe that the current price is in the process of recovering. In order to guarantee the company's long-term interests, we believe that it is not a matter of blindly expanding production at the moment, but rather protecting the recovery of the current price. So it is expected that we will have too much output compared to last year's fourth quarter.

As for the price level, we are now in the middle form, which has a greater impact on the sales value.

Okay. So, hi. And here's the response from Leo. Firstly, you know, because we think the Brownian price is in its recovery stage.

And we think... Since it's under its current stage and we should not rely on the expression of our production alone. So we estimate the production volume maybe will be similar as last year Q4, Q4. Okay, that's great. Secondly, we think because the Dead Sea region, the situation, could, you know, alert market dynamics and the pricing of bromine as well. So we are monitoring the events in the Middle East, their side.

And regarding that, I mean, I've seen that the price of bromine outside of coming from the Middle East or coming from the U.S. is higher than the price of bromine in China. Is the export team looking at the possibility of exporting some bromine to Asia, like to India or to Singapore? Has the export task force looked at that? Yes.

Because the embroidery industry in China does not have much in the surrounding areas. So if you want to export to a far place, it will increase a lot of shipping costs. So we are also paying attention to this. In addition, it is not very convenient to transport the price of embroidery. There are a lot of safety needs. So we are also paying attention to this matter. But how big is the gap? If the gap is enough to support these costs, we will consider it.

Hi, Alan. Firstly, because the downstream of the bromine industry are majorly in China area, but not in Asia. So the main demand are here. And secondly, because growing is very dangerous to transport, and the transportation cost is very high. So based on these two factors, we think if we wanted to translate, like you said, Asia, other countries, and also, for example, Singapore, maybe we have to evaluate and monitor the market condition, and to evaluate the cost and the benefit

Yeah, okay, that would be great. I think if the export task force could look at that, that would be a great thing, okay? Sorry for all these questions have been so long, okay? But thank you very much for your answers, okay?

Okay, you're welcome. Okay, the next question comes from John Smith with Gulf Resources. Please proceed.

Oh, can you hear me?

Yes. Hi, Joe. I love you.

Okay. Hi. Um, my question, I, first thing I just want to say, uh, thank you to the chairman who has been, uh, with the company for a long time. He's done a good job building a business. And I think the current CEO is in a good spot to take his spot and continue the good management. So the first off is just thank you.

Um,

After that, my question goes off of Elaine's question on the bromide. Look, thinking that we just spent $50 million in the flood prevention, that's good. But if we could export some of that bromide, I understand the cost would be bad. And I think looking at it from an economic standpoint, it might not make sense. But if you could just export $2, $3, $4, $5 million a year, you could use that money to buy back shares. And with shares right now at an all-time low, that would instantly double, triple, quadruple, times five the market value. So I think you guys do a good job running the business. But if you want to bring back shareholder value, I think you need to not just look at it from an economic standpoint, but from the shareholder standpoint as well. And it's good for you. You guys could pay yourself in stock at $8 a share. I mean, the stock would skyrocket if you guys bought back. two million shares and which at this price you could do easily so thank you okay okay thank you thank you um

The second thing he wants to say is that although this is like Alan mentioned earlier, if we export to Asian countries, it may be considered that the profit is not so much that it can bring great profits to the company, but because of this, it is possible that the company can keep cash overseas and use this cash to buy back. um um

Okay, John, thank you very much. Will you consider about this suggestion? And by the way, we just want to say

that because, you know, borne raw material is a very dangerous material during transportation. So there might be some special requirements, you know, from the government policy when we want to export. But anyway, we will do more research on this project and to see if we can do this.

Awesome. Yep, I understand it might be more expensive, but again, maybe even if you lose some money, it could really boost your stock price. So thank you. I have one more question. Oh, yeah, thank you. Thank you for that. Would you, on this hypothetical, would the company – right now we are valued so low compared to our worth. Would the company think about taking – Like, say, $15, $20 a share? Obviously, hypothetical.

What do you mean, $20 or $15 per share? Would you consider a buyout at $15 or $20 a share?

Okay. You mean go private or sell the company to someone else?

Yeah, to go private. If someone bought it for $15 to $20 a share, yeah. Okay. No, we don't think about this currently. Okay, so no. And then I have one more question. Thank you.

Um, the flooding, the big flood that happened was that I think 2018, um, that caused the $40 million, uh, damage. If that were to happen again, under the new flood plan, um, what would your estimates, would you think how much costs would that cost the company? If a very similar typhoon hit, um, after your, uh, um, preventions.

Okay. Mr. Liu, let's talk about the third question. In 2018, the company spent more than $40 million to build these fire-fighting facilities. After the company built this fire-fighting facility, if there was another typhoon similar to the one in 2018, what would the company's loss be? If there was another typhoon similar to the one in 2018,

so if like the similar typhoon as year 2018 happened again after all this flood provision you know project we think the cost you know for us to get everything done again

will be very few. Maybe around 3 to 5 million, we can finish all of the, you know, retirements.

Wow, that is, that's really good, if that's true. So that makes the plan seem a lot better.

Okay, thank you.

Yes, sir.

Thank you. Okay, the next question comes from Randy Liggett, private investor. Randy, please proceed.

Hey, Helen, how are you?

Hi, Randy. Fine, how are you?

I'm fine, thank you. I'm afraid I'm not going to be as nice as the first two guys. I mean, this conference call sounds like the same one we've heard for the last 10 to 15 conference calls. And, you know, I mean, you just, it doesn't sound like management has taken to heart one idea that investors have brought to them. You know, okay, the flood prevention plan, that's fine. But, you know, we haven't looked at advisors to help the company. Management's fine with the bromide facilities and remediation of the facilities and all that stuff. They cannot. and have shown they cannot enhance shareholder value. If anything, look at the price of the stock. I don't understand the stubbornness why we will not hire advisors to help management get through this. And it's just an anomaly to me. I would think you guys would want to get paid. We would like to get paid. And for heaven's sakes, if somebody offers, as John mentioned, $15 to $20 a share, sign on the dotted line. This has been going on for how many years? And, you know, this is all fine and dandy, but we keep throwing, I mean, we just talk about the same old stuff every conference call. And it's like management does not listen to one thing investors are just, you know, throwing out there for ideas. And, you know, I mean, look at it. Look at where the stock close down. I mean, $1.50, and I haven't even done the math on the reverse split. I'm sure somebody on here probably knows that. But when is management going to wake up and listen to a few things that we are suggesting? Go hire an advisor, please. I mean, I don't know what else to say. Also, where do we stand in negotiations with, you know, The local government on this gas, natural gas, we've been talking about for how many years now? I mean, I can't count the years. I'm going to be dead before I'm joking when I say that, but I hope not because, I mean, the value is there, and it's like we don't do anything. That's what I'd like to hear back.

Okay, thank you. I'm done for a minute.

Sorry, Helen. Sorry.

Okay, it's okay. It's okay. Don't worry. I got you. He is curious about the company. That is to say, every time I listen to the investment opinion when I report it, but because the stock price performance is not good, I don't say that it's like the 15 yuan and 20 yuan that I just mentioned, but when I see the current stock price of the company, we think that the management team of this company should wake up and see how to return the shareholder and raise the stock price. Think about their suggestion to hire a third-party IR company to help the company to do this and raise the stock price.

We will consider this question. How to raise the share price Hi, thank you. Thank you. Okay. Hi, Andy. Thanks very much for your comments. And we want to say that we have been always thinking about our shareholders and how to reward our shareholders.

At the beginning or maybe like last quarter, previous quarters, we were thinking that because, you know, we have many production lines, we wanted to have all our production lines to be like more, you know, online or finished. Then we can talk to our firm to see how they can give us idea based on our ideal business model. And in order to help our investors increase our shares, But now, based on all these comments and based on the current situation, we may think this in advance and we will go to talk, consider go to talk with the AI firm to see based on what we can do now. Hopefully it can help us do more promotion and to increase the awareness of the company increase our rewards to our shareholders?

I mean, that's fine and dandy, but we're not doing anything to do it. I mean, I want to see, you know, we talk about it and talk about it and talk about it. And I know I'm going on and on. I'm going to get off in a minute. But it's the same thing. I mean, you could call, you have Chinese investment bankers, you have international investment bankers that work all over China. I mean, I just don't get it. We're spending all this money all of a sudden on flood prevention, and yet we don't want to go out and retain somebody to help us realize the value in the company? I don't get it. I mean, I really don't. And you know me. I've been around a long time, Helen. Yeah, I know you. Yes, ma'am. I got you.

Yeah, I got you.

Okay, what about the local government?

Go ahead. Yes, I understand you. That's why I made sure to ask you.

Yes, ma'am. I mean, you know, and there would be no reason to turn down $15 or $20 tomorrow afternoon if somebody were to make that. I mean, my Lord, I think shareholders would jump up and down for joy, and so would management. I mean, but where are we with the negotiations with the local government on natural gas? I don't think he answered that unless I missed it.

Okay. Mr. Liu, that's what Randy was saying just now. I hope the company can do some things in real time to communicate with the IR company or the investment bank. The second thing he wants to ask is how is our communication with the local government in Sichuan?

Hi Andy, because you know in the Sichuan project, the Sichuan province project,

Local government, they have some new ideas come out in their mind. And there are some new competitors in the industry also, you know, come out. So we are still doing the active discussion with the local government on this project.

Okay. I mean, have you all even thought about going to China Petrof? What's the big company that has the natural gas fine next to where y'all own the land? What's the big company? I mean, I don't know why we don't go to them and try to do a joint partnership. I just don't get it. I'm going to keep quiet, Helen, and thank you for your help as usual.

You're welcome. You're welcome. Why didn't the company go to the Chinese oil company for a cooperation? The one next to it.

The Chinese oil company wants to kill us, instead of having a cooperation. So we can't reach a specific cooperation agreement with them.

So because, you know, China Metro, they do not, they, instead of, you know, cooperation, they just wanted to merge the company. So we think this is not what we want. So that's why we were looking for the cooperation with local governments, you know, and during the discussion with local governments and there are some new competitors come out. and the government have some new ideas in their minds, you know. So that's why this discussion is still undergoing.

Okay. One other quick question since you brought it up. I mean, what did they want to buy? Did they just want to buy that natural gas field, or what were they talking about?

You mean China Metro?

Yes, ma'am. Yes, ma'am.

Mr. Liu, what kind of charge do China and Europe want? Do they just want our TNT? Or do they want to take away all of our mines? The negotiation is a complicated process.

Okay. Hi, Randy. You know, the discussion on this kind of agreement, no matter whether local governments or PetroChina or other companies, it's very complicated. There are a lot of items.

all criteria is under, you know, discussed. And until it's finalized and until we can have, you know, a final, you know, decision or whatever, we cannot, you know, talk too much about it.

Okay. Well, I mean, one last comment. Please go hire an advisor this week. There are plenty of them out there that would take you on. Spend a little bit of money with them and let them see what they can come up with. Please. Thank you, Helen, as usual. Okay. Appreciate it.

Okay. Okay. Thank you. You're welcome.

The next question comes from Tom.

Okay.

Private investor, Tom. Please proceed.

Thank you for taking my question. I have a few questions. I hope you can hear me.

Yes, I got you, Tom.

Thank you, Helen. So the typhoons, they hit in 2018 and 2019, and we are in 2023. I want to understand the reasoning for proceeding with this flood prevention program at this stage. So I want to understand the management thought process on why the decision was made to proceed with this flood prevention program currently. And the second question, I have a series of questions, but just on the flood prevention, I want to understand why the management notified investors only after it had spent, already spent a third of the projected expense for it. So is there a reason for this delay in in notifying the shareholders. And I also want to understand why a decision was made to proceed with the flood prevention at this stage.

Okay, I got you. President Liu, this question is from Tom. He has two questions. First, why did the typhoon happen in 2018 and 2019? Why did the company decide to do this project in 2023? And then the second question is about the cost. It is said that the opening of 15 million yuan occurred in the third quarter. Why did the company say that this project was revealed at the end of the quarter? First of all, after the flood in 1919,

This is the first one. The second one is that we think this is a normal business behavior of the company. So it was exposed during the quarter. We didn't want to delay this time. Okay. So firstly, Tom,

Because after the typhoons in 2018 and 2019, we have to evaluate the surrounding area and our main area to think how to do this. Then we see other companies, how they do it until they finish. Then we can learn some knowledge from them and experience from them. And at this stage, we think it's a very appropriate period, time, stage to do this, since we have more knowledge and we learned a lot from others. Second question, because, you know, we think this cost was like a normal operating expense, we did not think it's very, you know, abnormal. So when it happened in tier three, And when we just, you know, disclose it in our thank you to our investors.

Thank you. That sounds like a reasonable explanation. I want to get a sense of what the $15 million expense was. And I think from one of the other gentlemen's question, I understood that the remaining nearly $35 million was going to be spent in Q4. Is that assumption correct?

Yes. Probably, yes.

Okay. My next set of questions are with regard to, you know, a previous gentleman asked if the management would consider a buyout at $15 or $20 a share. And I think the CEO answered that they would not consider it. And I wanted to get a sense of why they would not even consider it. And the reason is, you know, around 2017, there was around 209 million in the company's books. And as of this release, there's only half of that, around 104 million or so. And so we have gone through a period where there's not been much return for shareholders. It's been... Not much value has been created. Actually, a lot of value has been decimated in the last, you know, last seven years or so. And so I just want to get a sense from a shareholder's perspective why the management would not even consider a buyout at $15 or $20 million, $15 or $20 per share. Hi, Tom.

I think because this question we just discussed in previous quarters. Firstly, company we have, you know, our bromine business segment, even though now it's not look very good, but you know, because bromine price is very low now. But once bromine price come increase or come to back to its normal price, our business is very profitable in this bromine segment. Then our natural gas in citron proteins also have a big potential because the concentration of the bromine resources there is very low rich. Third, our chemical business. Even though now chemical business are not online yet, but we have very confidence in our this segment as well. So overly, and we know bromine resources are limited resources like very few production in the world. So, overall, we think we have quite confidence in our company. So, that's why we do not consider to sell it at a $15 or $20 currency.

We have reached the end of the question and answer session, and I will now turn the call back to Helen for any closing remarks.

Hi, operator.

I think if there is no more question, we can close for the call today because it's, you know, time limit, time out.

Absolutely.

And I'm welcome if any shareholders have questions, feel free to email me. And I will be happy to respond to them on the emails as well. Just keep in touch.

Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.