Gulf Resources Teams with Brazil Miner, Targets $180M in 2027
Chinese bromine producer Gulf Resources (GURE) signed a joint venture with Brazil's Montes Verdes, guaranteeing at least $180 million in 2027 sales and 20% annual growth.
Gulf Resources (GURE) plans to enter the Brazilian market through a joint venture with Montes Verdes Participacoes Ltda., a mining company focused on gold, manganese, lithium, bromine and rare-earth minerals. The deal, signed Aug. 20, includes a revenue guarantee: at least $180 million in consolidated sales by 2027, with annual growth of no less than 20% in each of the following five years.
The Chinese bromine and crude salt producer said the strategic cooperation agreement will let it tap into the Brazilian company's mineral holdings, particularly bromine and lithium resources. "We are entering a most exciting time for our company," Chairman and CEO Liu Xiaobin said in the press release. "Bromine prices have improved sharply. With issues in the Middle East, manufacturers throughout the world are seeking alternative sources."
The move comes as bromine prices rise amid Middle East supply disruptions, increasing the appeal of alternative sources, according to the company. The broader commodities analysis shows a similar trend in other industrial minerals.
Liu said the framework agreement "will be a win-win for both companies" and lays the foundation for a partnership that includes bromine, crude salt, lithium and other products. "We will be able to generate cash outside of China, which will increase the flexibility in our capital structure," he said.
The press release did not specify the joint venture's ownership structure or the exact mining areas involved. Montes Verdes guarantees that if the 2027 sales target is met and profitability is at or above industry levels, additional shares of Gulf may be issued based on the average price-to-earnings ratio for that year.
Gulf Resources operates three wholly-owned subsidiaries in China and says it is one of the country's largest bromine producers. The company's stock has traded below $1 for extended periods, and management has cited its U.S.-listed Chinese company status and domestic focus as factors suppressing the share price. The international expansion plan, announced alongside the agreement, is intended to broaden revenue streams and improve market capitalization.
The agreement covers a range of minerals beyond bromine, including lithium, a key battery metal. The Brazilian company, Montes Verdes, also focuses on vegetable seed breeding and fertilizer. The joint venture will integrate the two companies' industrial resources and technology, according to the release.
Liu said the company is "committed to enhancing shareholder value" and called the agreement "a significant first step" in delivering on that promise. Both parties remain in discussions on further details.
The company's forward-looking statements caution that actual results may differ materially due to risks including economic conditions in China, the COVID-19 pandemic, and market acceptance of products.
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