China Precision Steel has begun the construction of its third cold rolling mill and expects the mill to begin production in June 2009. The new mill is designed to process steel with a width up to 1450 mm and will be a tandem mill with best-in-class gauge control and shape performance capable of producing high quality steel for exposed and unexposed products. The Company expects to make an additional investment of $900,000 to complete the mill. The addition of the third mill is expected to enhance the Company's market position by increasing production design capacity by 33%, once fully operational, and broaden the Company's product line offerings.
"We believe that the mid- to long-term market opportunity for our precision products remains attractive and have therefore, stayed on schedule with the construction of our third mill. Moreover, we have strengthened our balance sheet by reducing accounts receivables and current liabilities which contributed to the Company generating over $8 million in cash during the first six months of fiscal 2009," Dr. Li commented. "While we expect that the impact of the global economic slowdown will persist for the foreseeable future, we continue to negotiate new contracts and believe we are well positioned to expand our market penetration over the next several years."