Gulf Resources Inc (GURE) 2022 Q2 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Gulf Resources 2022 Quarter Earnings Conference. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Helen Xu. The floor is yours.

問候，女士們，先生們，歡迎來到海灣資源 2022 年季度收益會議。 （操作員說明）現在我很高興將地板交給您的主持人 Helen Xu。地板是你的。

Thank you, operator. Good morning, ladies and gentlemen, and good evening to those of you joining us from China or U.S. And we'd like to welcome all of you to Gulf Resources Second Quarter 2022 Earnings Conference Call. I'm Helen Xu, the IR Director. The company CEO, Mr. Xiaobin Liu; COO, Mr. Naihui Miao, will also join this call today.

謝謝你，接線員。早上好，女士們，先生們，晚上好，來自中國或美國的各位加入我們，我們歡迎大家參加海灣資源公司 2022 年第二季度收益電話會議。我是 IR 總監 Helen Xu。公司CEO劉曉斌先生；首席運營官繆乃輝先生今天也將參加此次電話會議。

I'd like to remind you to all of our listeners that in this call certain management statements during the call will contain forward-looking statements, information about the Gulf Resources Inc. and its subsidiaries business and products 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.

我想提醒我們所有的聽眾，在這次電話會議中，某些管理層聲明將包含前瞻性聲明、關於海灣資源公司及其子公司業務和產品的信息，這些信息在規則 175 的含義內1933 年證券法和 1934 年證券交易法下的第 3b-6 條規則，並受這些規則創建的安全港的約束。

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 COVID pandemic outbreak; future product development and production capabilities; shipments to end customers; market acceptance of new and existing products; additional completion from existing and new completion from the bromine and the other oilfields and the power production chemicals; changing technology; the ability to make future bromine assets; and various other factors beyond its control.

考慮到許多風險因素，包括但不限於中國的總體經濟和商業狀況，實際結果可能與今天討論的結果有所不同；與 COVID 大流行爆發相關的風險；未來的產品開發和生產能力；向最終客戶發貨；新產品和現有產品的市場接受度；溴和其他油田以及電力生產化學品的現有完井和新完井的額外完井；改變技術；製造未來溴資產的能力；以及其他各種無法控制的因素。

All forward-looking statements are extremely qualified in their entirety by this cautionary statement and the risk factors detailed with the company's reports filed with the SEC. Gulf Resources assumes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Accordingly, our company believes expectations reflecting in those forward-looking statements are reasonable, and there can be no assurance of such will prove to be correct.

所有前瞻性陳述在整體上都非常符合本警示性聲明以及公司向美國證券交易委員會提交的報告中詳述的風險因素。海灣資源不承擔修改或更新任何前瞻性陳述以反映本次電話會議日期之後的事件或情況的義務。因此，我們公司認為這些前瞻性陳述中反映的預期是合理的，並且不能保證這些預期會被證明是正確的。

In addition, any reference to the company's future performance represents the management's estimates as of today, the 15th of August 2022. 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.

此外，對公司未來業績的任何提及均代表管理層截至今天，即 2022 年 8 月 15 日的估計。對於那些此時無法收聽整個電話的人，可以在公司網站上獲得重播。該電話也可以通過網絡廣播進行訪問，並且可以通過我們的網站訪問該鏈接。因此，請找到我們之前發布的新聞稿以獲取詳細信息。

Note that the company has reported a strong quarterly profit, with hopefully stronger quarterly numbers in the coming quarters. We are going to increase our efforts to communicate with our investors. We welcome you provide suggestion to our IR management team.

請注意，該公司報告了強勁的季度利潤，並有望在未來幾個季度實現更強勁的季度業績。我們將加大與投資者溝通的力度。我們歡迎您向我們的 IR 管理團隊提出建議。

On this call, I will review the second quarter and the 6 months results first and then turn the call over to Mr. Miao and Mr. Liu for their commentary.

在這次電話會議上，我將首先回顧第二季度和 6 個月的業績，然後將電話轉給苗先生和劉先生髮表評論。

So now firstly, let's look at the 3-month period ending June 30, 2022. We are pleased to have reported a strong and profitable second quarter in year 2022. Revenues increased 41 percentage to $15.7 million. Gross profit increased 80% to approximately $7.6 million. Income from operations were approximately $5.1 million, compared to a loss of approximately $2.4 million. Net income was $3.9 million, compared to a loss of $2.7 million. Earnings per share were $0.37, compared to a loss of $0.26. 6-month period ending June 30, 2022, net revenue increased 50% to approximately $24.6 million. Gross profit increased 126% to approximately $7 million. Income from operation were approximately $5 million, compared to a loss of approximately $5.7 million. Net income was $3.8 million, compared to a loss of $5.2 million. Earnings per share were $0.36, compared to a loss per share of $0.50.

所以現在首先，讓我們看看截至 2022 年 6 月 30 日的 3 個月期間。我們很高興地報告了 2022 年第二季度強勁且盈利的情況。收入增長 41% 至 1570 萬美元。毛利潤增長 80% 至約 760 萬美元。運營收入約為 510 萬美元，而虧損約為 240 萬美元。淨收入為 390 萬美元，而虧損為 270 萬美元。每股收益為 0.37 美元，而虧損為 0.26 美元。截至 2022 年 6 月 30 日的 6 個月期間，淨收入增長 50% 至約 2460 萬美元。毛利潤增長 126% 至約 700 萬美元。運營收入約為 500 萬美元，而虧損約為 570 萬美元。淨收入為 380 萬美元，而虧損為 520 萬美元。每股收益為 0.36 美元，而每股虧損為 0.50 美元。

Now let's look at the second quarter business segment, firstly related of bromine. Bromine revenue in the second quarter increased 38% to $13.9 million. The primary contributor to the higher revenue versus increase in the selling price. In second quarter, the average selling price was $7,740, compared to $5,556 in the same quarter of the previous year. There is always a lag in average selling price compared to the market price, and the company fulfilled orders based on when they are received.

現在讓我們看一下第二季度的業務板塊，首先是與溴相關的業務。第二季度溴收入增長 38% 至 1390 萬美元。收入增加而不是售價增加的主要原因。第二季度，平均售價為 7,740 美元，而去年同期為 5,556 美元。平均售價與市場價格相比總是存在滯後的，公司根據收到訂單的時間履行訂單。

During the quarter, the company sold 1,795 tonnes of bromine, slightly lower than 1,805 tonnes in the previous year. During the second quarter, in order to control COVID-19, the government made a series of unannounced inspections that caused the company to shut and then reopen facilities. During the second quarter of 2021, there was 1 full inspection. The company believes the inspection in 2022 had a more significant impact on production than it did in the inspection in the year 2021. The cost of revenues in bromine were approximately $6.9 million, an increase of approximately $1.3 million from the same quarter of the previous year.

本季度，該公司銷售了 1,795 噸溴，略低於上年的 1,805 噸。在第二季度，為了控制 COVID-19，政府進行了一系列突擊檢查，導致公司關閉然後重新開放設施。 2021年第二季度，全檢1次。公司認為，與 2021 年的檢查相比，2022 年的檢查對生產的影響更大。溴的收入成本約為 690 萬美元，比上年同期增加約 130 萬美元.

The price of bromine in China, the RMB has appreciated approximately over 100 percentage since September 2020, although the Chinese economy has slowed, bromine prices remained very strong for 2 primary reasons. Firstly, the demand remained strong for fire retardants (inaudible) and pharmaceuticals. Secondly, supply constraints, both because older fields may have lower utilization and because many countries like China have forced the closing of bromine facilities for environmental reason. In a recent press release, as of now we are one of the world's largest producers of bromine, which stated that tight market conditions continue to drive strong demand and favorable pricing for bromine. We believe the supply and demand balance for bromine remains extremely promising.

自 2020 年 9 月以來，中國的溴價（人民幣）升值了約 100% 以上，儘管中國經濟放緩，但溴價仍然非常強勁，主要有兩個原因。首先，對阻燃劑（聽不清）和藥品的需求依然強勁。其次，供應限制，既是因為老油田的利用率可能較低，也因為中國等許多國家出於環境原因強制關閉溴設施。在最近的一份新聞稿中，截至目前，我們是世界上最大的溴生產商之一，該公司表示，緊張的市場條件繼續推動溴的強勁需求和有利的定價。我們認為溴的供需平衡仍然非常有希望。

To comply with the new government directive, the company separated bromine and crude salt into 2 business separate entity. As a result of this relocation, bromine received a significant higher allocation of expenses than in previous years. Even with the higher allocation of cost, income from bromine segment increased 98.5% to approximately $5.3 million from approximately $2.7 million. In the quarter, the company spent approximately $32.8 million, mainly in its bromine wells, aqueducts and the installation of high- and low-voltage lines for bromine wells. The company believes this expenditures may enable it to maintain a slightly increased utilization in the bromine segment in future quarters.

為遵守新的政府指令，公司將溴和原鹽分為兩個業務獨立實體。由於此次搬遷，溴獲得的費用分配比往年顯著增加。即使成本分配較高，溴業務的收入也從約 270 萬美元增長 98.5% 至約 530 萬美元。本季度，該公司花費約 3280 萬美元，主要用於溴井、渡槽以及溴井高低壓線路的安裝。該公司認為，這筆支出可能使其能夠在未來幾個季度保持溴部門的利用率略有增加。

The company continue to believe it will receive permission to open one of its closed facilities in the near future. And hopes to be able to open a second in the first half of year 2023. On August 3, 2022, as of now, as we discussed early, it stated in its press release, that the market conditions continue to drive strong demand and favorable pricing for bromine. The company also believes the same condition may apply to its business in China.

該公司仍然相信，它將在不久的將來獲得開放其封閉設施之一的許可。並希望能夠在 2023 年上半年打開第二個。截至 2022 年 8 月 3 日，正如我們之前討論的那樣，它在新聞稿中表示，市場狀況繼續推動強勁的需求和利好溴的定價。該公司還認為，同樣的條件可能適用於其在中國的業務。

Now let's look at the second quarter results for crude salt segment. Crude salt revenues increased 62 percentage to approximately $1.8 million. There was a 10% increase in production in tonnes and a 47% increase in average standard price. The cost of net revenue decreased by 9%, largely as a result of the reallocation of costs. Crude salt reported income from operations of $142,968, compared to a loss of $578,435.

現在讓我們看看原鹽分部的第二季度業績。原鹽收入增長了 62%，達到約 180 萬美元。以噸為單位的產量增加了 10%，平均標準價格增加了 47%。淨收入成本下降 9%，主要是成本重新分配的結果。粗鹽報告的運營收入為 142,968 美元，而虧損為 578,435 美元。

Now let's look at the chemical segment in the second quarter 2022 results. The chemicals segment revenues were 0. The net loss were for $475,000 in the previous -- in this quarter. During the quarter, COVID restrictions as well as supply chain issues caused the delays in receiving some of the previous ordered machinery and equipment, including wastewater treatment and solid waste treatment equipment. The company is working with existing suppliers and may identify new suppliers so it can complete construction of its factory based on the delivery.

現在讓我們看一下 2022 年第二季度的化工板塊業績。化學品部門的收入為 0。上一季度的淨虧損為 475,000 美元 - 在本季度。在本季度，新冠疫情的限制以及供應鏈問題導致之前訂購的一些機械和設備的接收延遲，包括廢水處理和固體廢物處理設備。該公司正在與現有供應商合作，並可能確定新的供應商，以便根據交付情況完成工廠建設。

To date, the company has spent approximately $45.6 million on its new factory. It's believed the total cost will be approximately $69 million. The company cannot currently project when construction will be completed and production will begin, but does not believe delays will impact the cost of the projection. Our long-term profitability, the company will update our investors as soon as the wastewater treatment and solid waste treatment equipment is delivered.

迄今為止，該公司已在其新工廠上花費了大約 4560 萬美元。據信總成本約為6900萬美元。該公司目前無法預測建設何時完工並開始生產，但認為延遲不會影響預測成本。我們的長期盈利能力，公司將在廢水處理和固體廢物處理設備交付後立即更新我們的投資者。

Now let's look at natural gas in this quarter. Natural gas segment had zero revenue and a net loss of $61,699. That's equal to the loss in the previous year. Pursuant to the opinion of the Ministry of Natural Resources and several issues in promoting the reform of these mineral resource management, trial by the Ministry of Natural Resources and Forestry on January 9, 2020, which came in effect on May 1, 2020. Privately owned enterprises are allowed to participate in the natural gas production. The company plans to proceed with its application for the natural gas and provide project approvals with related government departments until the government planning has been finalized.

現在讓我們看一下本季度的天然氣。天然氣部門的收入為零，淨虧損 61,699 美元。這相當於前一年的損失。根據自然資源部意見及推進礦產資源管理改革若干問題，2020年1月9日由自然資源和林業部試行，自2020年5月1日起施行。允許企業參與天然氣生產。公司計劃繼續申請天然氣，並向相關政府部門提供項目批准，直至政府規劃完成。

Now let's look at the balance sheet. The company had cash of approximately $79.1 million. Total assets were approximately $298.6 million. Total liabilities were approximately $23 million. Shareholders' equity was approximately $275.6 million based on the shares issued and outstanding, which is 10,471,924 shares. Book value per share or shareholders' equity per share was $26.32.

現在讓我們看看資產負債表。該公司擁有約7910萬美元的現金。總資產約為 2.986 億美元。總負債約為 2300 萬美元。根據已發行和流通的股份，股東權益約為 2.756 億美元，即 10,471,924 股。每股賬面價值或每股股東權益為26.32美元。

Cash flow. The company generated approximately $18.5 million in cash flow from operations versus $7 million in the previous year. The company invested approximately $33.2 million in its bromine business, mainly for bromine wells, aqueducts and the installation of high- and low-voltage lines for bromine wells. The change in the value of RMB to the U.S. dollar cost reduction in cash. And the cash equivalents of approximately $1.6 million versus a credit of $1.9 million.

現金周轉。該公司從運營中產生了大約 1850 萬美元的現金流，而上一年為 700 萬美元。該公司在其溴業務上投資約 3320 萬美元，主要用於溴井、渡槽以及溴井高低壓線路的安裝。人民幣對美元價值的變化降低了現金成本。現金等價物約為 160 萬美元，而信貸為 190 萬美元。

For other financials in the second quarter. Direct factory and overhead costs for closed factory were approximately $1.9 million versus $1.4 million in the same period of previous year. Corporate costs declined to $67,987 from approximately $3.2 million. In the second quarter of year 2021, the company incurred approximately $2.1 million in (inaudible) charges for the stock grant to management. There were no stock grant in the second quarter of 2022.

對於第二季度的其他財務。關閉工廠的直接工廠和間接費用約為 190 萬美元，而去年同期為 140 萬美元。公司成本從大約 320 萬美元降至 67,987 美元。在 2021 年第二季度，公司因向管理層授予股票而產生了約 210 萬美元（聽不清）的費用。 2022年第二季度無股票授予。

Foreign currency translation adjustment. For the quarter, the company had a negative foreign translation adjustment of approximately $16.4 million versus a positive adjustment of approximately $5.3 million in the previous year. This adjustment was caused by an approximately 6.1 percentage decline of RMB versus the U.S. dollar. Adjustment impact all balance sheet translation into U.S. dollar.

外幣折算調整。本季度，該公司進行了約 1640 萬美元的負外語翻譯調整，而上一年為約 530 萬美元的正調整。這一調整是由於人民幣兌美元匯率下跌約 6.1%。調整影響所有資產負債表轉換為美元。

Now let's look at our 6 months results by segment. Firstly, the revenue in bromine segment increased 48 percentage to approximately $22 million. Net selling price increased 39%. Costs increased 19% to approximately $10.8 million. Income from operations increased 376% to approximately $6.7 million despite the higher allocation of costs as a result of separating salts from bromine segment.

現在讓我們按部分查看我們 6 個月的結果。首先，溴業務的收入增長了 48%，達到約 2200 萬美元。淨售價上漲 39%。成本增加了 19%，達到約 1080 萬美元。儘管將鹽與溴部分分離導致成本分配增加，但運營收入增加了 376% 至約 670 萬美元。

Crude salt. The loss from crude salt segment from operation was approximately $379,000 versus a loss of $1.6 million.

原鹽。原鹽業務的運營損失約為 379,000 美元，而損失為 160 萬美元。

Chemical and natural gas. Chemical products lost approximately $988,000, and natural gas lost approximately $88,000, as neither business had revenue in this 6 months.

化工和天然氣。化工產品損失約 988,000 美元，天然氣損失約 88,000 美元，因為在這 6 個月內這兩個業務都沒有收入。

Now let me turn the call back to Mr. Miao and Mr. Liu for their commentary.

現在讓我把電話轉回苗先生和劉先生的評論。

(foreign language).

（外語）。

[Interpreted] So I will do the translation for Mr. Miao's commentary. Mr. Miao say that hello, hi, everyone. I'm the company's COO, Miao Naihui. So welcome to attend the Gulf Resources Second Quarter and First Half Year 2022 Earnings Conference Call.

【翻譯】所以我來翻譯一下苗先生的評論。苗先生打個招呼，大家好。我是公司的COO，苗乃輝。因此，歡迎參加海灣資源公司 2022 年第二季度和上半年收益電話會議。

With our new wells updated and other bromine facilities updated, the company should be able to maintain or slightly increase its utilization rate and production. In the remainder year of 2022, prices continue to be very strong for bromine. Our average selling price in the second quarter was $7,740. As COVID-19 abate, we expect increase in demand for bromine and related products. The combination of higher utilization and higher pricing should lead to significant improvement in the profit in the third quarter and beyond in our bromine segment.

隨著我們新井的更新和其他溴設施的更新，公司應該能夠維持或略微提高其利用率和產量。在 2022 年餘下的一年中，溴的價格繼續非常強勁。我們第二季度的平均售價為 7,740 美元。隨著 COVID-19 的減弱，我們預計對溴及相關產品的需求會增加。更高的利用率和更高的定價相結合應該會導致我們溴部門第三季度及以後的利潤顯著提高。

We would, however, like to remind our investors that Chinese New Year is 10 days earlier in year 2023 than it was in year 2022. We do not know if the government will require closing of facilities. But if it does, a small amount of fields could be transferred from the fourth quarter 2022 to -- into first quarter 2023. In addition, we are hopefully receiving approval to reopen 1 factory in the near future because we have already made a lot of work in this factory. We expect further CapEx expenditures will be raising the factory side only. We look forward to strong profit improving in coming quarters.

然而，我們想提醒我們的投資者，2023 年的農曆新年比 2022 年提前 10 天。我們不知道政府是否會要求關閉設施。但如果是這樣，少量的田地可能會從 2022 年第四季度轉移到 2023 年第一季度。此外，我們希望在不久的將來獲得重新開放 1 家工廠的批准，因為我們已經做了很多在這家工廠工作。我們預計進一步的資本支出支出只會提高工廠方面。我們期待未來幾個季度利潤強勁增長。

(foreign language).

（外語）。

[Interpreted] Now we'll do the translation for Mr. Liu's commentary. Mr. Liu said that, Hello, everyone, I'm the company's CEO, Mr. Xiaobin Liu. First of all, welcome all of you to attend the Gulf Resources Second Quarter and First Half Year 2022 Earnings Conference Call. We are very pleased to have reported earnings of $0.37 per share in this quarter despite the COVID disruption. We believe earnings will continue to be strengthened. We are working hard to solve supply chain issues with our wastewater and solid waste treatment equipment for our new chemical factory. Once this equipment is delivered, we will be able to complete the construction and begin (inaudible) production and test production based on the market for pharmaceuticals and thereby products as well as the market for other chemicals using bromine. We believe our chemical factory will produce strong returns.

【翻譯】現在我們來翻譯劉老師的評論。劉總說，大家好，我是公司總裁劉曉斌先生。首先，歡迎大家參加海灣資源2022年第二季度和上半年收益電話會議。儘管 COVID 中斷，我們很高興在本季度報告了每股 0.37 美元的收益。我們認為盈利將繼續增強。我們正在努力解決新化工廠廢水和固體廢物處理設備的供應鏈問題。一旦該設備交付，我們將能夠根據藥品市場和產品市場以及使用溴的其他化學品市場完成建設並開始（聽不清）生產和測試生產。我們相信我們的化工廠將產生強勁的回報。

We also believe that we will be able to produce natural gas and bromine (inaudible). At this time, management has not received any stock grant for year 2022 yet. If it does receive stock grants in coming quarters, the grants will be lower. Grant numbers will be lower than last year. We appreciate the patience of our shareholders while we are not making projections based on the current price of bromine. We expect remainder of the year will be extremely profitable. We know that our investors will like company to pay dividend or buy back stock. As we have said before, we would be very much to be able to do this. But unfortunately, with currency controls, we cannot get money out of China.

我們還相信我們將能夠生產天然氣和溴（聽不清）。目前，管理層尚未收到 2022 年的任何股票授予。如果它確實在未來幾個季度收到了股票贈款，那麼贈款將會減少。撥款數量將低於去年。我們感謝股東的耐心，雖然我們沒有根據溴的當前價格做出預測。我們預計今年剩餘時間將非常有利可圖。我們知道我們的投資者會希望公司支付股息或回購股票。正如我們之前所說，我們將非常能夠做到這一點。但不幸的是，由於貨幣管制，我們無法從中國獲得資金。

Our long-term plan is to be able to produce pharmaceutical chemicals that can be exported to other countries, especially those in Asia, where there is a high demand for these products. Once we are producing this pharmaceutical chemicals, we believe we will be able to use export revenues to buy back stock or pay dividend. We appreciate the patience of our shareholders. While we are not making projections based on the current price of bromine, we expect the remainder of the year will be profitable. Is the likelihood of another bromine factory may begin to open soon potential of our chemical business and the opportunities in the transformation? We believe our future will be very bright. So, operator?

我們的長期計劃是能夠生產可出口到其他國家的醫藥化學品，尤其是對這些產品有高需求的亞洲國家。一旦我們生產出這種醫藥化學品，我們相信我們將能夠利用出口收入來回購股票或支付股息。我們感謝股東的耐心。雖然我們沒有根據溴的當前價格做出預測，但我們預計今年剩餘時間將盈利。是否有可能再開一家溴廠，很快我們的化工業務的潛力和轉型中的機會？我們相信我們的未來會非常光明。那麼，運營商？

Yes, Helen.

是的，海倫。

Can we open up for the QA section?

我們可以打開 QA 部分嗎？

Absolutely.

絕對地。

(Operator Instructions) And the first question is coming from James Holtz, Private Investor.

（操作員說明）第一個問題來自私人投資者 James Holtz。

Yes. What percentage of the $33 million of bromine capital expenses in Q2 was for currently operating bromine factories? And what percentage was for the closed factories?

是的。第二季度 3300 萬美元的溴資本支出中有多少百分比用於當前運營的溴工廠？關閉工廠的百分比是多少？

Jim, I didn't get your question very clearly. Do you mind just explain again?

吉姆，我沒有很清楚地明白你的問題。你介意再解釋一下嗎？

What percentage of the $33 million of bromine capital expenses for Q2 was for currently operating bromine factories? And what percentage was for the closed factories?

第二季度 3300 萬美元的溴資本支出中有多少百分比用於當前運營的溴工廠？關閉工廠的百分比是多少？

Okay. This is $33 million was the 6-month expenditure, right? Okay.

好的。這是 3300 萬美元，是 6 個月的支出，對吧？好的。

No, is this for the quarter? But go ahead.

不，這是本季度的嗎？但是繼續。

32 or something, I think.

32左右，我想。

32.6. Average -- rounds to $33 million.

32.6。平均 - 達到 3300 萬美元。

Yes. Got it. (foreign language).

是的。知道了。 （外語）。

(foreign language).

（外語）。

[Interpreted] James, basically, these expenditures are mainly for current operating facilities. Because if those closed facilities, we do not have yet -- we cannot put a large investment on it. And this major investment are for the reasons because we have some old wells and aqueducts which have been used -- need to be -- it's lifetime long. So we need to write off it.

【解讀】詹姆斯，基本上，這些支出主要是用於目前的運營設施。因為如果那些關閉的設施，我們還沒有——我們不能在上面投入大量資金。而這項重大投資的原因是因為我們有一些已經使用過的舊井和渡槽 - 需要 - 它的使用壽命很長。所以我們需要註銷它。

In order to maintain the utilization and the production, we had to do new wells and aqueducts. The 2 the electricity for this wells, like we say, for the high- and low-voltage lines for these wells and aqueducts as well.

為了維持利用和生產，我們不得不做新的水井和渡槽。 2 這個井的電力，就像我們說的，這些井和渡槽的高壓和低壓線路。

So there was no money spent on the closed facility? Is that correct? For capital? No money spend on closed facilities?

所以沒有錢花在封閉的設施上？那是對的嗎？為了資本？沒有錢花在封閉的設施上？

(foreign language).

（外語）。

(foreign language).

（外語）。

Yes, there are maybe 2 percentage around approximately, but we did not do the clearly calculation, maybe around 2 percentage. Mainly for the Beijing site, like the supervision control and the safety production. That's all.

是的，大概有2個百分點左右，但是我們沒有做清楚的計算，大概2個百分點左右。主要針對北京現場，如監督控制和安全生產。就這樣。

Okay. I have a second question, and that is, what capital expenditures you expect for the remainder of this year? And what percentage will be for the Chemical segment? What percentage for the current bromine factories? And what percentage for the closed factories? Or just what dollars do you expect to spend on the bromine segment and what dollars do you expect to spend on the chemical factory for the remainder of the year, capital dollars?

好的。我有第二個問題，即您預計今年剩餘時間的資本支出是多少？化工板塊的百分比是多少？目前溴廠的比例是多少？關閉工廠的百分比是多少？或者，您預計在溴部門花費多少美元，以及您預計在今年餘下時間在化工廠上花費多少美元，資本美元？

(foreign language).

（外語）。

(foreign language).

（外語）。

(technical difficulty) It looks like we lost his line. We'll have him reconnected shortly. One moment.

（技術難度）看起來我們失去了他的路線。我們很快就會讓他重新連接。一瞬間。

Jim, maybe I can answer your question first, then Mr. Liu (inaudible). Firstly, if we look at our chemical segment, the total cost estimates we predicted were $69 million, and the company has spent $46 million. So there will be like totally $23 million for budget for our chemical business. But this $23 million...

吉姆，也許我可以先回答你的問題，然後是劉先生（聽不清）。首先，如果我們看看我們的化工部門，我們預測的總成本估計為 6900 萬美元，而公司已經花費了 4600 萬美元。因此，我們的化學業務預算將總共有 2300 萬美元。但這2300萬美元...

(foreign language).

（外語）。

(foreign language).

（外語）。

(foreign language).

（外語）。

(foreign language).

（外語）。

(foreign language).

（外語）。

[Interpreted] Jim, I may continue to explain the comments from Mr. Liu. As I explained earlier that the total budget for chemical business is $69 million. And until today, the company has spent $45.6 million on this new factory. So there will be approximately $23 million left for its chemical budget. It depends how -- when we can get the equipment fully delivered and when we can start our continued production -- continued construction on this project for chemical segment.

[解釋]吉姆，我可以繼續解釋劉先生的評論。正如我之前解釋的那樣，化工業務的總預算為 6900 萬美元。直到今天，該公司已經在這家新工廠上花費了 4560 萬美元。因此，其化學預算將剩下大約 2300 萬美元。這取決於如何——我們什麼時候可以讓設備完全交付，什麼時候可以開始我們的持續生產——繼續建設這個化工部門的項目。

So if we look at the bromine segment, we will not have any like expenditure plan for our current producing facilities (inaudible) for the rest of the year. But if we have got one factory approval to reopen in the next half year. There will be around 1 million investment for this factory, which need to restart up its production. So we need to update some of its equipment.

因此，如果我們看一下溴部分，我們將不會在今年剩餘時間內為我們目前的生產設施（聽不清）制定任何類似的支出計劃。但是，如果我們獲得了一家工廠的批准，可以在下半年重新開工。這家工廠將投資100萬左右，需要重新開始生產。所以我們需要更新它的一些設備。

So if I understand you correct, for the bromine segment for the rest of this year, you expected most $1 million. And for the chemicals segment, you expected most $23 million. Although if you don't get the equipment delivered, it will be some less -- some amount less than the $23 million. Is that correct?

因此，如果我的理解正確，對於今年剩餘時間的溴部分，您預計最多 100 萬美元。對於化學品部門，您預計最多 2300 萬美元。雖然如果你沒有得到設備，它會少一些——比 2300 萬美元少一些。那是對的嗎？

Yes. Yes, that's correct.

是的。對，那是正確的。

The next question is coming from Randy Liggett, Private Investor.

下一個問題來自私人投資者 Randy Liggett。

A couple of quick questions. I can't remember, but upward the natural gas, the potential was up there in PetroChina up there. And if they are, I think there's some big company out there. I mean, are they doing natural gas right at the moment? And trying to think what my other question was. Also, what is the holdup? I mean, are they coming -- is the government coming back on these factories and everything and saying, "You need to do this. You need to do that."? That's been going on for a long time. And just wondering about that. And how often -- how many days were you all shut down because of the COVID inspections? And that's it for the time being.

幾個快速的問題。我不記得了，但是在天然氣上面，中石油的潛力就在那裡。如果是的話，我認為那裡有一些大公司。我的意思是，他們現在在做天然氣嗎？並試圖思考我的另一個問題是什麼。另外，什麼是滯留？我的意思是，他們會不會來——政府是否會回來對這些工廠和所有事情說，“你需要這樣做。你需要這樣做。”？這已經持續了很長時間。只是想知道這一點。多久一次——你們因為新冠病毒檢查而被關閉了多少天？暫時就是這樣。

Okay. Randy, I want to just repeat your question, if I get it clear. Firstly of your question is, in Sichuan, if the Petroleum China are there? If it is here, are they producing natural gas now, right?

好的。蘭迪，如果我明白了，我想重複你的問題。首先你的問題是，在四川，有沒有中國石油？如果它在這裡，他們現在在生產天然氣，對嗎？

Yes, ma'am. Right.

是的女士。正確的。

And the second question is regarding the COVID-19 inspection. You say that how long is it had for this quarter -- for the second quarter?

第二個問題是關於 COVID-19 檢查。你說這個季度——第二季度有多久？

Yes, ma'am.

是的女士。

Okay. Got you. I will do the translation. (foreign language).

好的。得到你。我會做翻譯。 （外語）。

(foreign language).

（外語）。

[Interpreted] Randy, firstly, let's look at your first question regarding the natural gas projects. So as we know that Petroleum China, they have located in Sichuan, which is not far from our company site, which is around 2 kilometers only far. And they are doing their coproduction currently still, they did not start formal production yet. And based on our understanding because Petroleum China, which is a state-owned enterprise, and they have a special policy. They can start with production.

[翻譯]蘭迪，首先，讓我們看看你關於天然氣項目的第一個問題。據我們所知，中國石油，他們位於四川，離我們公司所在地不遠，只有2公里左右。而且他們目前還在做合拍，還沒有開始正式的製作。根據我們的了解，因為中國石油是一家國有企業，他們有特殊的政策。他們可以從生產開始。

Now currently, the Chinese government they have restrictions to natural gas and halogen water in Sichuan province. (inaudible) restrict and prices like us, which like, they even go state, promote the -- and privately owned enterprise to participate in this area. So until now, we are still waiting for the government approval on this area for us. This is the first question.

目前，中國政府對四川省的天然氣和鹵水有限制。 （聽不清）限制和價格像我們一樣，他們甚至去國家，促進 - 和私營企業參與這一領域。所以直到現在，我們還在等待政府在這方面的批准。這是第一個問題。

Second question is, in the second quarter, because there are many times unexpected, due to this COVID-19, unnoticed inspections from government to our producing -- to our company site, sometimes for 1 day, sometimes for 2 days. So...

第二個問題是，在第二季度，由於這次 COVID-19，有很多次出乎意料，從政府到我們的生產地——到我們公司的現場，有時會持續 1 天，有時會持續 2 天。所以...

Yes. So they're just coming in there and just...

是的。所以他們只是進來然後...

For many times, yes. Yes, they come and check. They do not tell you, "Okay. In 2 days we are going to come to check." Because COVID-19 come very quickly and they just say, okay, we'll come to check 1 or 2 days, onetime. It's not like last year second quarter, which lasts for long time, but this lasts for a very short time, but unnoticed. So totally, we calculated it may be around 11 to 12 days for this quarter.

很多時候，是的。是的，他們來檢查。他們不會告訴你，“好的。兩天后我們會來檢查。”因為 COVID-19 來得很快，他們只是說，好吧，我們會來檢查 1 或 2 天，一次。不像去年第二季度，持續時間很長，但這種持續時間很短，卻不為人知。所以總的來說，我們計算出本季度可能需要 11 到 12 天。

Okay. One last question. Have you made any inroads with any of the EV car manufacturers about their batteries or the battery makers? Because I keep reading about bromine is very important to those. And that will be the end, my last question.

好的。最後一個問題。您是否與任何電動汽車製造商就他們的電池或電池製造商取得了進展？因為我一直在閱讀有關溴對那些人非常重要的信息。這將是結束，我的最後一個問題。

Okay. Thank you. (foreign language).

好的。謝謝你。 （外語）。

(foreign language).

（外語）。

(foreign language).

（外語）。

(foreign language).

（外語）。

[Interpreted] Randy, currently, our customers are still the old relation customers. So we do not see any, like you said, this situation. But next half year, our production will be increased, and we may look for opportunities in this area.

【解讀】Randy，目前我們的客戶還是老客戶。所以我們沒有看到任何，就像你說的那樣，這種情況。但下半年，我們的產量會增加，我們可能會在這方面尋找機會。

The next question is coming from (inaudible) with [Dorel] Capital.

下一個問題來自（聽不清）[Dorel] Capital。

My question is that recently 5 major state-owned Chinese companies listed in U.S. have announced to be delisted from U.S. market, like Alibaba and Petro China and China Life Insurance. Of course, they are multibillion dollar market cap companies versus Gulf Resources. It's about teeny market cap, $46 million market cap. My question is that, in lure of that is happening, has the management thought that the ongoing auditing team for Gulf Resources meet that Security and Exchange Commission auditing requirement?

我的問題是，最近有5家在美國上市的主要中國國有企業宣布從美國市場退市，如阿里巴巴、中石油和中國人壽。當然，與海灣資源公司相比，它們是市值數十億美元的公司。這大約是很小的市值，4600萬美元的市值。我的問題是，在這種情況下，管理層是否認為海灣資源的持續審計團隊符合安全和交易委員會的審計要求？

Do you think that the existing auditing team meet the requirement of the SEC requirement? If the management does not believe, how far or how satisfied the management think the current auditing team meet the requirement of SEC? If not, what the management is going to do to adjust the difference of the auditing requirement so that Gulf Resources will shrink the risk of potentially being delisted? That's my question. Can you share some ideas on that, please?

您認為現有的審計團隊是否符合 SEC 的要求？如果管理層不相信，管理層認為當前審計團隊滿足 SEC 要求的程度或滿意度如何？如果不是，管理層將如何調整審計要求的差異，以降低海灣資源可能被退市的風險？那是我的問題。你能分享一些想法嗎？

Okay. Thank you. I have got you. I'll share with Mr. Liu. (foreign language).

好的。謝謝你。我來幫你。跟劉老師分享一下。 （外語）。

(foreign language).

（外語）。

[Interpreted] Okay. This is the response from Mr. Liu's firstly regarding your first question. Yes, what you mentioned that the company management also realized its problem and this news recently. The -- firstly, the SEC required those companies to be delisted from U.S. market. The major reason because their disclosure are not transparent enough and they cannot submit sufficient document and auditing files to SEC. First, we did analysis of our situation. We have different position with them because our company, we are beyond the China -- the control, Chinese government information control. We do not have those information which we cannot come -- disclose to SEC or U.S. And so we think our auditing file and our all information disclosed satisfied to U.S. SEC.

[解釋] 好的。這是劉先生首先針對您的第一個問題的回應。是的，你提到的公司管理層最近也意識到了它的問題和這個消息。 - 首先，美國證券交易委員會要求這些公司從美國市場退市。主要原因是他們的披露不夠透明，無法向SEC提交足夠的文件和審計文件。首先，我們分析了我們的情況。我們和他們有不同的立場，因為我們公司，我們超越了中國——控制，中國政府信息控制。我們沒有那些我們無法獲得的信息——向美國證券交易委員會或美國披露，因此我們認為我們的審計文件和我們披露的所有信息都滿足美國證券交易委員會的要求。

And of course, this are based on current China policy and the current SEC requirement. We think we do not -- we will not have the situation you mentioned for those delisted. But of course, we cannot predict for future any -- if the policy of Chinese government, their government policy changed or SEC change. This is the first question this one.

當然，這是基於當前的中國政策和 SEC 的要求。我們認為我們沒有——我們不會有你提到的那些被除名的情況。但是，當然，我們無法預測未來的任何情況——如果中國政府的政策、他們的政府政策發生變化或美國證券交易委員會發生變化。這是第一個問題。

Secondly, your question about our auditing team. We always provide our documents, our information and all the disclosure documents to our auditors on time and with sufficient disclosure. We want to make sure they satisfy and meet all the requirements from U.S. government and SEC. So we do not think we'd have such a problem as well.

其次，您對我們審計團隊的問題。我們始終按時並充分披露信息向審計師提供我們的文件、信息和所有披露文件。我們希望確保它們滿足並滿足美國政府和 SEC 的所有要求。所以我們不認為我們也會有這樣的問題。

The next question is -- we have a follow-up, actually, from James Holtz.

下一個問題是——實際上，我們有來自 James Holtz 的跟進。

You have said that you expect the quantity of bromine production in Q3 to exceed that in Q2. And you've also said that you expected the sale price in Q3 to exceed that in Q2. How much more money do you expect? How much more profits do you expect to make in Q3 than in Q2?

您曾說過，您預計第三季度的溴產量將超過第二季度。而且您還說過您預計第三季度的銷售價格將超過第二季度。你還期望多少錢？您預計第三季度的利潤比第二季度多多少？

Okay. (foreign language).

好的。 （外語）。

(foreign language).

（外語）。

[Interpreted] Jim, so like you said, there's 2 reasons. Of course, we expect our third quarter revenues will be higher than second quarter. But currently, we cannot provide it yet because, firstly, for a fair disclosure to all our investors. And secondly, we really cannot assess the exact number, but we will provide guidance for this segment maybe by this month.

[解釋]吉姆，就像你說的，有兩個原因。當然，我們預計我們第三季度的收入將高於第二季度。但目前，我們還不能提供它，因為首先是為了向我們所有的投資者公平披露。其次，我們真的無法評估確切的數字，但我們可能會在本月之前為這一部分提供指導。

Guidance for the bromine segment, you'd provide guidance this month in August?

溴部門的指導，你會在 8 月的這個月提供指導嗎？

Yes.

是的。

Okay.

好的。

(foreign language).

（外語）。

(foreign language).

（外語）。

Yes, Jim.

是的，吉姆。

Okay. We have one remaining question coming from (inaudible) from [Dorel].

好的。我們還有一個問題來自 [Dorel]（聽不清）。

I have not finished up my questions. I was going to wrap it. My next question is, what is the name of the current auditor? And then where are they located? That's my first question.

我還沒有完成我的問題。我打算把它包起來。我的下一個問題是，現任審計師的名字是什麼？然後他們在哪裡？這是我的第一個問題。

My second question is that, by looking at your 27 revenue of over $1.7 million. And of course, it's hard to predict when you would be reaching that level of revenue for government regulations. But how would you project that the company will be back to over $100 million in revenue in the next few years? Is there something you may share some light on that?

我的第二個問題是，通過查看您 27 年超過 170 萬美元的收入。當然，很難預測您何時會達到政府規定的收入水平。但是，您如何預測該公司在未來幾年內的收入將超過 1 億美元？你有什麼可以分享的嗎？

You mean over $100 million revenue per year? One time we...

你的意思是每年超過 1 億美元的收入？有一次我們...

That was 27, 27 in revenue. I mean, is there any way that the management could share Mr. Liu can share some light when you would be potentially projected to reach that 27 -- 2017 year revenue and then over $2 per share income?

那是 27, 27 的收入。我的意思是，當您預計在 27 年 - 2017 年的收入和每股收入超過 2 美元時，管理層有什麼辦法可以讓劉先生分享一些信息？

Okay. So I do not get your question. Like $27 million? Do you mean year 2027?

好的。所以我不明白你的問題。比如2700萬美元？你是說2027年嗎？

My apologies. 2017 year revenue is over $107 million in revenue. My apologies for the mistake.

我很抱歉。 2017 年收入超過 1.07 億美元。我為這個錯誤道歉。

2017?

2017 年？

Yes. 2017 revenue is over $107 million, and the per share income is over $2 per share.

是的。 2017年收入超過1.07億美元，每股收益超過每股2美元。

(foreign language).

（外語）。

(foreign language).

（外語）。

[Interpreted] Regarding your first question, the auditor name is WWC. And they have offices in China and the U.S. as well.

【解讀】關於你的第一個問題，審核員的名字是WWC。他們在中國和美國也設有辦事處。

Sorry. I didn't hear the name of it.

對不起。我沒聽過它的名字。

WWC.

世界婦女大會。

WWC, that's the abbreviation?

WWC，這是縮寫嗎？

Yes. If you send me e-mail, I can send you their full name.

是的。如果你給我發電子郵件，我可以把他們的全名發給你。

(foreign language).

（外語）。

This concludes today's portion of the call for Q&A.

今天的問答環節到此結束。

Thank you very much for attending this call, yes.

非常感謝您參加這次電話會議，是的。

Thank you, Helen.

謝謝你，海倫。

You're welcome. Thank you.

別客氣。謝謝你。

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

謝謝你們，女士們，先生們。這確實結束了今天的電話會議。你可以在這個時候斷開你的電話線，並有一個美好的一天。感謝您的參與。

You, too. Bye-bye.

你也是。再見。

Take care, Helen.

保重，海倫。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[此成績單中標記為 [已翻譯] 的部分由現場通話中的口譯員朗讀。]