China Gerui Advanced (NASDAQ:CHOP)

We believe that our future capital expenditures will be incurred primarily in connection with (i) purchases of property, plant and equipment and construction of our facilities, (ii) leasehold improvements, (iii) investment in equipment, technology and operating systems, and (iv) capitalized interest. Our planned capital expenditures for 2011 and 2012 are for (i) the second phase of our capacity expansion program, in which 100,000 metric tons of processing capacity will be added by the first quarter of 2012, resulting in total capacity of 500,000 metric tons of cold-rolled steel processing, out of which 50% can be further plated with chromium, zinc or tin; (ii) upgrade our existing narrow strip acid pickling line for acid regeneration and environment control; and (iii) potential acquisitions or strategic partnership initiatives. We expect to finance these capital expenditures from cash on hand, future internal cash flows, short-term bank borrowings, and funds raised from capital markets.