Gulf Resources, Inc. Q1 FY2023 earnings call

• The chemical factory and Natural Gas facilities were closed due to winter shutdown, losing one month of production. Bromine and crude salt prices dropped sharply, but excluding closed factory costs, the company would have earned a profit. Generated almost $5 million cash and ended up with a cash position of almost $116 million. - Believes bromine prices will rebound, plans to open one of two closed factories in 2023 and start producing natural gas and brine in Sichuan. - Chemical segment is waiting for customized machinery related to environmental issues, expected to be delivered in second or third quarter of 2023, with installation, testing, approval, and trial production planned. - COO named Chairman of task force to explore export opportunities for chemicals. - Discussing joint venture with Daying County government for Sichuan natural gas and brine project.

Bromine and Crude Salt Segment: For the three months ended March 31, 2023, bromine segment net revenue was approximately $8.5 million, an increase from $8.1 million in the same period of 2022. This was due to a 101% increase in tonnes sold but a 48% decrease in average selling price. Gross profit margin was 27% compared to 52% in the same period last year. Cost of net revenue for bromine was approximately $6.1 million vs $3.9 million in the same period last year, with an operating loss of $409,700 vs profit of $1.3 million previously. Crude salt segment net revenue was $748,700 in 2023 vs $754,000 in 2022. It saw a 32% increase in tonnes sold and a 25% decrease in average selling price. Cost of net revenue was approximately $620,000 vs $629,600 previously, with a profit of $42,930 vs loss of $521,921 in the same period last year. Chemical Segment: No revenue, with an operating loss of approximately $417,900 for the three months ended March 31, 2023, compared to $513,000 in the same period. Natural Gas Segment: No revenue from production, with income from operations of approximately $12,700 in 2023 vs a loss of approximately $26,700 in the same period of 2022.

• Expect bromine prices to rebound. - Plan to restart one closed factory in 2023. - Chemical equipment expected to be delivered in second or third quarter of 2023, followed by installation, testing, approval, and trial production. - Explore joint venture with Daying County government for Sichuan project.

• General economic and business conditions in China. - Risks associated with the COVID-19 pandemic outbreak. - Future product development and production capabilities. - Shipments to end customers. - Market acceptance of new and existing products. - Additional competition from existing and new players in bromine and other oilfields and power production chemicals. - Change in technology. - Ability to make future bromine assets and various other uncontrollable factors.

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