VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 3, 2014) - Huaxing Machinery Corp. (TSX VENTURE:HUA) ("Huaxing" or the "Company") reports that its 80% owned operating subsidiary, Shandong Gold Rhino Huaxing Machinery Co., Ltd. ("Gold Rhino") entered into a land quotas transfer agreement on October 26, 2014 (the "Agreement") with an affiliated company, Shandong Huaxing Steel Structure Co., Ltd. ("Steel Structure"). Steel Structure is a wholly owned subsidiary of Shandong Huaxing Mechanical, Inc., which owns a 20% equity interest in Company's subsidiary Gold Rhino.
Pursuant to the Agreement, Steel Structure has agreed to transfer to Gold Rhino, state owned land purchase quotas for approximately 20.9 Ha of undeveloped industrial land located in Boxing County, Shandong Province China (the "Land"). Under the Agreement, Gold Rhino has agreed to reimburse Steel Structure fees for obtaining the land purchase quota paid by Steel Structure to the Boxing County government which totals RMB 48,984,140 or approximately CDN $8,950,000 (the "Reimbursement"). Under the Agreement, over the next two years Gold Rhino is required to complete the land purchase by paying to the Chinese government land purchase costs, land sales tax, tax on use of farm land and land management and licensing fees. If Gold Rhino fails to complete the purchase of the Land it is obligated to pay Steel Structure RMB 10,000,000 (approximately CDN $1,830,000). The total costs, taxes and fees associated with the acquisition of the Land, including the Reimbursement to Steel Structure is RMB 130,124,540 or approximately CDN $23,790,000.
Due to the rapid growth of the urban areas in Boxing City, the current industrial site leased and occupied by Gold Rhino is now surrounded by new residential development. The Boxing County government has approved the re-zoning of the land and premises currently used by the Company to residential land use. Consequently, the Company and its operating subsidiary must vacate the current site of operations within approximately two years. Since Steel Structure had already begun the process of acquiring the land purchase quotas, it made good business sense for Gold Rhino to acquire the industrial land directly.
The source of funds for the costs, fees and taxes associated with the acquisition of the Land will include: offsetting accounts payable of Steel Structure; cash flow from operations; and bank financing, if necessary.
Construction of the manufacturing facilities and offices having an area of approximately 75,600 square meters, is expected to occur in two phases in 2016 and 2017. The total construction cost is expected to be approximately RMB 113,400,000 or CDN $20,730,000.
The Land acquisition and the Agreement are subject to the approval of the TSX Venture Exchange.
About Huaxing Machinery Corp.
Huaxing is a manufacturer of stone processing equipment and steel structure fabrication equipment. Through its wholly owned subsidiary Gold Rhino Limited, Huaxing holds an 80% controlling equity interest in Shandong Gold Rhino Huaxing Machinery Corp., the operating entity that holds the manufacturing facilities located in Boxing County, Shandong Province, China. Its main products are stone sawing, cutting, polishing and processing machinery, and a robotic welding system for steel structure fabrication. The processed stones and steel structures are both used in the building and infrastructure construction industry.
Forward-Looking Statements
Certain information regarding Huaxing Machinery Corp. contains herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. The Company assumes no obligation to update such forward-looking statements, except as required by applicable securities laws or exchange regulations. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The Company seeks safe harbour.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.