China Runji Cement (PINK:CRJI)

On May 17, 2011, we received resignations from Shouren Zhao, Xiangfei Zeng, Xuanjun Yang and Liming Bi. Mr. Zhao resigned as president, chief executive officer and as chairman to our company’s board of directors. Ms. Zeng resigned as our company’s chief financial officer. Mr. Yang and Mr. Bi resigned as directors of our company. Mr. Zhao’s, Ms. Zeng’s, Mr. Yang’s and Mr. Bi’s resignations were not the result of any disagreements with the Company regarding its operations, policies, practices or otherwise. We also decreased the number of directors on our board of directors to two (2).

During the first six months of fiscal year 2011, we implemented the following measures to improve our internal control over financial reporting:

(1)   Engaged outside consultants to assist in our assessment of the effectiveness of our company’s internal control over financial reporting; and also employed a new general manager with rich management experience in cement industry to strengthen our daily operation and management, as well as working with outside consultant in the reporting process.
(2)   Developed and instituted new internal control procedures to strengthen our month-end close and financial reporting processes.

We believe these measures have strengthened our internal control over financial reporting and disclosure controls and procedures.

The Company produces cement through the advanced dry production process, an energy efficient and environmentally friendly cement production technique. Although the Chinese government has mandated the elimination of 250 million tons of outdated cement production capacity by 2010, only 60% of the total output in the region is currently produced by dry process. The Company has a rigorous quality control system and received ISO9001 quality system certification and international accreditation in March 2006. In addition, our Company passed the national GB/T 19001-2000 standard authentication. The Company’s pollution control exceeds the national standard and received “green building material” certification in 2007.

The Company has an abundant supply of high quality raw materials. The Company has obtained a 30 year mining right for 87 million tons of limestone reserve, which can supply two cement clinker production lines with a daily output of 2,500 tons for 40 years. Presently, the Company is one of the largest cement producers and distributors in the north Changjiang region of Anhui, with a 10% market share within a 100 mile radius of its facility.

The Company is the only producer of P.II52.5 cement (the highest quality cement) in the north Changjiang region of Anhui and Jiangsu Provinces, with 70% market share within a 100 miles radius of its facility. Annual production capacity of the Company is two million tons cement and cement clinker. The Company’s main market for cement is in Hefei (Anhui Province), with total sales of 750 thousand tons, representing 75% of our total annual cement production and an additional 25% is sold in Chaohu and its surrounding areas, Moreover, the Company’s main cement clinker market is in Chaohu with total sales of 800 thousand tons in the area, representing 80% of our total annual cement clinker production, and an additional 20% is sold in Hefei.

Our Business Plan

• We plan to raise adequate capital over the next five years for expansion and growth.

• We invested over USD$50 million to build up one cement production line with daily production of 2,500 tons and one cement clinker production line with daily production of 2,500 tons. The newly invested cement clinker production line was put into production in October 2008.

• We invested USD$10 million to establish a waste heat power generator system to convert waste heat into electricity, which was put into operation on October 25, 2009, in order to realize significant savings on electricity costs, to improve our margins and reduce reliance on outside power sources. From October 25, 2009 to August 31, 2010, the waste heat power generator system has generated electricity of 39.6 million kilowatt-hours and saved us USD$3.45 million in electricity costs.
  

The Company anticipates that it will need approximately $30 million to implement its business plan and meet its capital expenditure needs over the next three years. The Company currently does not have any arrangements for additional financing and it may not be able to obtain financing when required.

1:25PM Please see new GeoTeam articles.  "Capitalizing on China's Stimulus Plan - Part I" and "Companies That May Benefit from China's Stimulus".