China GengSheng Minerals Signs Operating Lease Agreement for Fracture Proppant Manufacturing Facility
GONGYI, China, Oct. 27 /PRNewswire-Asia-FirstCall/ — China GengSheng Minerals, Inc. (NYSE Amex: CHGS), a leading China-based high-tech industrial materials manufacturer producing heat resistant, energy efficient materials for a variety of industrial applications, today announced that the company has signed a 3-year operating lease agreement for an approximately 215,000 square foot fracture proppant manufacturing facility located in Gongyi, Henan province, China. This new facility is expected to add 15,000 metric tons of annual production capacity, increasing the Company’s fracture proppant capacity to 75,000 metric tons per year.
Resources at this new facility will be used primarily for the manufacture of mid- to high-end fracture proppant products, targeting international customers.
“Increased drilling activity has driven significant growth in demand for our fracture proppant products from both domestic and international customers, and we expect that this demand will continue to grow going forward. This new facility provides us with a meaningful increase in capacity, which will enable GengSheng to more effectively address the sizeable growth opportunity that exists in the global proppant market,” said Mr. Shunqing Zhang, China GengSheng’s Chairman and Chief Executive Officer. “Since launching our fracture proppant product line in 2007, we have built a great deal of brand equity and developed a reputation as a provider of high-quality, value-added proppant products. We have achieved a great deal of success within the Chinese market, having developed strong relationships with China’s leading oil and gas exploration companies. Given our strong domestic foothold, we are working aggressively to expand our presence internationally in an effort to capitalize on the significant, untapped potential in the overseas market. We are in the process of developing a North American sales team that will allow GengSheng to more effectively engage customers internationally and capture additional market share as demand for proppant materials continues to grow.”
GengSheng commercially launched its fracture proppant products in the second quarter of 2007, and reported full-year 2009 revenue from this product segment of $8 million, representing a 3-year CAGR of 323%. For the second quarter of 2010, fracture proppants accounted for $3.1 million, or 20.6% of total revenue. Domestic customers accounted for approximately 50% of second quarter 2010 sales, with the remaining 50% coming from international customers, primarily located in North America.
About China GengSheng Minerals, Inc.
China GengSheng Minerals, Inc. (“GengSheng”) develops, manufactures and markets a broad range of high-tech industrial material products, including monolithic refractories, industrial ceramics and fracture proppants. A market leader offering customized solutions, GengSheng sells its products primarily to the iron-and-steel industry as heat-resistant components for steel-making furnaces, industrial kilns and other high-temperature vessels to guarantee and improve the productivity of those expensive pieces of equipment while reducing their consumption of energy. Founded in 1986 and based in China’s Henan province, GengSheng currently has over 200 customers in the iron, steel, oil, glass, cement, aluminum and chemical businesses located in China and other countries. GengSheng conducts business through GengSheng International Corporation, a British Virgin Islands company, and its Chinese subsidiaries, which are Henan GengSheng Refractories Co., Ltd., Zhengzhou Duesail Fracture Proppant Co., Ltd., Henan GengSheng Micronized Powder Materials Co., Ltd, Guizhou SouthEast Prefecture Co., Ltd., GengSheng New Materials Co., Ltd, and Henan GengSheng High Temperature Materials Co., Ltd.
For more information about the Company, please visit http://www.gengsheng.com.
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Note Regarding Forward-Looking Statements
This filing contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties, certain assumptions and factors relating to the operations and business environments of China GengSheng Minerals, Inc. and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. Although China GengSheng Minerals, Inc. believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to its management, China GengSheng Minerals, Inc. cannot guarantee future results or events. China GengSheng Minerals, Inc. expressly disclaims a duty to update any of the forward-looking statement
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