¡¡¡¡Undertaker:

¡¡¡¡Hunan Liheng Industry and Trade Co. Ltd. is a high-tech enterprise combining sci

entific research, production and trade. The main business is to introduce nanometer technology to mine mineral resources and engage in other business operation.Founded in 1997, the company has a large number of senior and middle professional talents, including doctor tutors, doctors and experts. The base of production, education and research has been formed together with the Qinghua University, Central South University and Taiwan Superfine Technology Co. Ltd. There are 16 people with senior titles, 28 people with middle titles and 52 people with college  degree. Utilizing the latest high-tech, technical breakthrough and abundant resources,we have made great success.The project with the annual output of 80 thousand tons nanometer silicon products was approved in the Development Planning Commission of Hunan Province (Reference No.£Û2001£Ý463).The company enjoys self-operated import and export license No.£Û2001£Ý117. It is also registered in General Administration of Customs of P.R.C. (Reference No.4307960015). The Changsha Designing Institute of Ministry of Chemical Industry has made a feasible report on this project. 18 hectares of land in Hanshou Taizimiao Development Zone has been requisitioned.

¡¡¡¡Brief introduction of the project:ª¥

¡¡¡¡The project is oriented to develop and produce series high-purity and ultra-finesilicon products, crystal silicon products, spherical silicon products and melting silicon products, about more than 10 products. Their purity can be 99.99 percent. They can be used in electronic industries, micro-electronic industries, optical fiber communication industries, advanced national defense industries, integrated circuit industries, melting silicon ceramic industries, cast industries, plastic and rubber industries, paint industries, IC chips industries, etc., used to produce all kinds of ultra-fine and high-purity nonmetal powder, modified fine powder and metallurgical powder.ª¤

¡¡¡¡Market prospect:

¡¡¡¡The study and development of new materials is essential to the sophisticated technology and the new elements manufacturing. SiOª­2  and silicon semiconductor has  made a brilliant success in micro-electronic technology since 1940s. The development of silicon products toward ultra-fine powder will play a more important role in the technology progress in 21st century. ª¥

¡¡¡¡1.Micro-electronic products: ª¥

¡¡¡¡It is reported that the world output value of micro-electronic products totaled over USD 145 billion in 1994, the integrated circuit was over 160 billion. What's more, there is an annual increase of 10 percent. The estimated output value in 2010 will hit USD1000 billion. Chinese micro-electronic industries develop more quickly than the world average development speed. According to the Tenth National Five-year Plan, integrated circuit will hit 10 billion in 2005 and 80 billion¡¡in 2010. Development of the micro-electronic products will accelerate the demand for rubber products which means a large market for melting silicon powder. Based on the figure of 15 billion integrated circuits in 1999, annual demand of melting silicon powder in China is about 70 thousand tons, the figure will increase up to 150 thousand tons in 2005 and 300 thousand tons in 2010.ª¥

¡¡¡¡2. Electronic products:ª¥

¡¡¡¡With the transformation of power grid all over China, the demand for plasticproducts increases dramatically. The estimated annual demand will be 700 thousand tons.ª¥

¡¡¡¡3.Melting-silicon ceramic products:ª¥

¡¡¡¡Melting-silicon ceramic products are widely used in spaceship industries, rocketindustries, missile industries, radar industries, atomic energy industries, steel and iron industries,non-ferrous metal industries, glass industries, coke making industries, etc. It is estimated that the annual demand for melting silicon in metallurgy industry will amount to 12 thousand tons, there are 5 thousand tons inglass industries and 7 thousand in ceramic industries, 6 thousand tons in ceramic cellar industries, 6 thousand tons in ceramic tile industries. Total demand for melting-silicon ceramic products is 30 thousand tons annually.ª¥

¡¡¡¡4. Nanometer silicon products are also widely used in cast industries, paint industries, plastic and rubber industries. There is a vast range of prospect for nanometer silicon products.ª¤ 

¡¡¡¡Construction plan:

¡¡¡¡The prospecting reserves of silicon amount to 100 million tons. Given the abundant raw materials of silicon, the project unit decided to develop and industrialize nanometer silicon products, which includes Sª­iOª­2 products series and nanometer series product. The project will be developed in three periods.ª¥1. The first period: construction of raw materials base. Total investment RMB 1.8 billion. Construction period: 1-3 years ª¥

¡¡¡¡a. Liheng Silicon Mine   (mining SiOª­2 to provide raw materials)ª¥

¡¡¡¡b. Liheng Ultra Fine Powder Plant  (the project has been approved by the Development¡¡Planning Commission of Hunan Province)ª¥

¡¡¡¡1)Liheng Crystal SiOª­2  40000t/aª¥

¡¡¡¡2)Liheng Melting SiOª­2  40000t/aª¥

¡¡¡¡3)Liheng spherical SiOª­2   2000t/aª¥

¡¡¡¡The investment is RMB200 million, it is divided into 2 stages with investment RMB 60 million in the first stage and RMB140 million in the second stage.The output of crystal SiOª­2 and melting SiOª­2 will be both 10 thousand tons per year in the first stage. ª¥c.  Liheng Semiconductor Products Plantª¥

¡¡¡¡1)Set up a producing base for polycrystalline silicon with the annual output of 1000 tons. Investment: RMB 1.2 billionª¥

¡¡¡¡2)Set up a production base for mono-crystalline silicon with annual output of 800 tons. Investment:RMB 400 millionª¥

¡¡¡¡2.The second period: construction of a nanometer products baseª¥

¡¡¡¡a.Liheng Nanometer Products Plantª¥

¡¡¡¡1). Nano-SiOª­2 powderª¥

¡¡¡¡2). Nanometer Silicon productsª¥

¡¡¡¡b.Liheng Barite Powder Plantª¥

¡¡¡¡3.The third period: construction of a silicon-valley nanometer city. The investment is RMB 2 billion. Construction time: 3 years.ª¥

¡¡¡¡a.Liheng IC Chips Plantª¥

¡¡¡¡b.Liheng Silicon Light Solar Cell Plantª¥

¡¡¡¡c.Liheng concrete supplementary material plant (including high efficiency mixing additive for cement, compound high strength additive for cement, waterproof and impermeability additive for cement)ª¥

¡¡¡¡d.Liheng Refractory and Thermal Insulation Products Plant (Sic, Si3N4, etc.).ª¥

¡¡¡¡f.Liheng Special Wear-Resisting Material Plantª¥

¡¡¡¡g.Liheng General Silicon Glass Plant, the development of the project is divided into 3 stages. The construction period is 8 years if the investment is in 3 stages. The total¡¡investment in three stages is RMB 4.8 billion. The project is under operation. With¡¡China's entry into WTO, there is a bright future to develop silicon products with nanometer technology.ª¤

¡¡¡¡Resources:

¡¡¡¡1. Raw materials supplyª¥

¡¡¡¡The raw material of this project is silica (quartzite) with the purity being above 95 percent, every lump less than 35 cm and the annual consumption of silic a (quartzite) 90 thousand tons. If the raw material supply base develops in two stages, the output of the first stage will be 22.5 thousand tons. The prospecting result from the No. 401, 403 Team of Hunan Geology Bureau and the Fifth National Petroleum Prospecting Team shows there is a silica mineral ore with total deposit of 100 million tons. The mineral ore stretch to Maxing Mountain on the north and Jinniu Mountain on the south with a length of 14 km and covers a area of 25.56 k£u. The silica in Gaolun Mountain is especially ideal to mine, the silica deposit in this area is more than 3.8 million tons with the purity being above 98 percent.It is a typical open-cut mine. Hunan Liheng Industry and Trade Co. Ltd is permitted to mine silica in this mining area. ª¥

¡¡¡¡2. Fuels ª¥

¡¡¡¡a. Coal: the annual coal consumption will be 4480 tons (caloric capacity: 6000 kcal/kg); the figure is 1120 tons in the first stage.ª¥

¡¡¡¡b. Diesel oil: the annual 0# diesel oil consumption will be 232 tons, and 58 tons in the first stage which can be available in the neighborhood.

¡¡¡¡c. Gasoline: the annual consumption of 93# gasoline will be 21 tons, and 6 tons in the first stage, which can be available in the neighborhood.

¡¡¡¡Revenue forecasting:ª¥

¡¡¡¡1. The estimated total investment is RMB175.5571 million, including fixed assets of RMB123.2771 million and liquid assets of RMB52.28 million. The sources of the fund are as follows:ª¥

¡¡¡¡a. The fund-raising of RMB 51.0871 million from the project unit (including liquid assets RMB15.68 million) is available and RMB16.8644 million is needed in the first stage.

¡¡¡¡b. Foreign investment or bank loan of RMB124.47 million, including RMB36.60 million bank loans as liquid assets and 39.32 million yuan is needed in the first stage.ª¥

¡¡¡¡2. Profits forecastingª¥

¡¡¡¡The main indexes of the project are as follows:ª¥

¡¡¡¡a.Annual sales value: RMB340 million/year (RMB85 million in the first period).ª¥

¡¡¡¡b.Annual average cost: RMB156.47million/year (RMB42.08 million in the first period).ª¥

¡¡¡¡c.Annual gross profit: RMB145.82million/year (RMB33.49 million in the first period).ª¥

¡¡¡¡d.Annual net profit: RMB 97.69 million/year(RMB22.44 million in the first period).ª¥

¡¡¡¡e.Profit rate: 83.06 percent (59.6 percent in the first period).ª¥

¡¡¡¡f.Profit and tax rate: 104.54 percent (76.37 percent in the first period).

¡¡¡¡g.Financial income rates:ª¥

¡¡¡¡After income tax:  66.17 percent (61.20 percent in the first period)ª¥

¡¡

¡¡¡¡Before income tax:   49.82 percent (44.38 percent in the first period).

¡¡¡¡h.Financial net value (IC=12 percent)ª¥

¡¡¡¡After income tax:  RMB341.23million (RMB82.09 in the first period).ª¥

¡¡¡¡Before income tax: RMB539.60 million(RMB102.24 in the first period).i.Investment recovery timeª¥

¡¡¡¡After income tax: 3.99 years recovery (3.54 years recovery in the first period).Before income tax:  3.49 years recovery (2.98 years recovery in the first period).ª¤

¡¡¡¡Favorable policies:ª¥

¡¡¡¡1.Land needed for the project will be provided favorably. ª¥

¡¡¡¡2.Exemption of all charges during construction.ª¥

¡¡¡¡3.Refunding of local tax.ª¥

¡¡¡¡4.Local government will form service groups in city level and county level to handle the relevant procedures.ª¤ª¥

¡¡¡¡Published by:Hunan Liheng Industry & Trade Co.Ltdª¥

¡¡¡¡Tel: 0086736-2853269  2852661  Fax:0086736-2853269ª¥

¡¡¡¡E-mail: 11d0506@sohu.comª¥

¡¡¡¡Website: www.liheng.org