Company: GURE
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001193805-25-001627
Chunk: 13

Company: GULF RESOURCES, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 13
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 two chemical production plants located in
the second living area of the Qinghe Oil Extraction to the Bohai Marine Fine Chemical Industrial Park (“Bohai Park”).
This was because the two plants were located in a residential area and their production activities impacted the living environment of
the residents. This was as a result of the country’s effort to improve the development of the chemical industry, manage safe production
and curb environmental pollution accidents effectively, and ensure the quality of the living environment of residents. All chemical enterprises
which did not comply with the requirements of the safety and environmental protection regulations were ordered to shut down.

In December 2017, the Company secured from the
government the land use rights for its chemical plants located at the Bohai Park and in June 2018, the Company presented a completed construction
design draft and other related documents to the local authorities for approval. In January 2020, the Company received the environmental
protection approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical factory. The Company began
the construction on its new chemical facilities located at Bohai Marine Fine Chemical Industrial Park in June 2020 and basically completed
the civil works by the end of June 2021. On November 15, 2021, the Company announced that due to the supply chain issues as well as the
electric restrictions in China, the delivery of some equipment, the equipment installation and testing and beginning trial production
at the chemical factory had been delayed. On February 22, 2022, the Company announced that discussions with the government have convinced
management that the electricity restrictions were eased. Accordingly, the Company contacted its suppliers and expect to have the remainder
of the equipment produced and delivered, so the Company can complete installation and begin testing and trial production.

The Company believes the relocation process will
cost approximately $69 million in total. The Company incurred relocation costs comprising prepaid land lease, professional fees related
to the design of the new chemical factory, and progress payment and deposit for the construction of the new factory building in the amount
of $45,584,344 and $45,584,344, which were recorded in the prepaid land leases and property, plant and equipment in the consolidated balance
sheets as of September 30, 2025 and December 31, 2024. The Company does not believe the delay in opening the factory will materially
impact the overall cost of the project.

(iii) Natural Gas Segment

In