China Direct Industries in Letter of Intent to Acquire Additional Magnesium Production Facilities

China Direct Industries in Letter of Intent to Acquire Additional Magnesium
Production Facilities

Company Intends to Sell Its Stake in Pan Asia Subsidiary in an Effort to
Focus Its IMG Branded Operations with Key Chinese Partner

DEERFIELD BEACH, FL, Oct. 5 /PRNewswire-FirstCall/ - China Direct Industries,
Inc. ("China Direct Industries") (NASDAQ: CDII), a U.S. owned, rapidly growing
holding company operating in China in two core business segments, pure
magnesium production and distribution of basic materials, announced today that
it has entered into a letter of intent with Taiyuan Yiwei Magnesium Group,
LTD. ("Yiwei Magnesium"), an entity controlled by Yiwei Huang, an executive
vice president and member of the China Direct Industries Board of Directors,
to acquire the remaining interest in its Chang Magnesium, Golden Magnesium and
Baotou Changxin Magnesium subsidiaries as well as acquire certain additional
facilities owned by Yiwei. In an effort to focus its magnesium production
efforts with its key Chinese partner, the company also intends to sell its
majority interest in its Pan Asia subsidiary. The company has begun
preliminary discussions with several potential buyers and will account for the
subsidiary as discontinued operations until such time as a sale is completed.
The non binding letter of intent entered into between China Direct Industries
and Yiwei Magnesium contemplates the creation of what China Direct Industries
believes will be the largest producer and distributer of pure magnesium and
related products in the world. In addition to the acquisition of the minority
stake in China Direct Industries magnesium subsidiaries owned by Yiwei
Magnesium, China Direct Industries is seeking to acquire up to five additional
magnesium facilities from Yiwei Magnesium. These new facilities have an annual
production capacity of a total of 40,000 metric tons of pure magnesium ingots,
10,000 metric tons of magnesium powder, and 10,000 metric tons of magnesium
alloy.
Upon completion of the proposed acquisitions and sale of its Pan Asia
subsidiary, management estimates it will have a total annual production
capacity of approximately 100,000 metric tons of pure magnesium and 20,000
metric tons of other magnesium related products in addition to its
distribution capabilities. This will also place all of China Direct
Industries' magnesium holdings branded as IMG under the centralized management
of Yiwei Huang.
The finalization of the proposed acquisitions is subject to completion of all
necessary due diligence, execution of definitive agreements, financing, and
China Direct Industry's board of directors approval. While there is no
timetable for completion of the transaction, both parties have agreed to work
expeditiously to reach a conclusion.
Commenting on this strategy, Dr. James Wang, Chairman and CEO of China Direct
Industries stated, "As our company moves into the consolidation phase of its
growth plan in our magnesium segment, we are confident that this industry has
a bright future and now is the time to position ourselves as the definitive
industry leader and create a platform for stability and expansion for the
years to come. It is also equally important to have a clear and unified vision
within our organization and the steps we are taking now will enable all of our
core magnesium holdings to be under the direction of one of the most
experienced industry veterans in Chairman Huang. We are more excited than ever
to take on this bold initiative and make our IMG brand known as the only U.S.
publicly held source for large quantities of high quality magnesium products."

About China Direct Industries, Inc.

China Direct Industries, Inc. (NASDAQ: CDII), is a U.S. owned, rapidly growing
holding company operating in China in two core business segments, pure
magnesium production and distribution and distribution of basic materials in
China. China Direct Industries also provides advisory services to China based
companies in competing in the global economy. Headquartered in Deerfield
Beach, Florida, China Direct Industries operates 10 subsidiaries throughout
China. This infrastructure creates a platform to expand business opportunities
globally while effectively and efficiently accessing the U.S. capital markets.
For more information about China Direct Industries, please visit
http://www.cdii.net.

DISCLOSURE NOTICE:

In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, China Direct Industries, Inc., is hereby
providing cautionary statements identifying important factors that could cause
our actual results to differ materially from those projected in
forward-looking statements (as defined in such act). Any statements that are
not historical facts and that express, or involve discussions as to,
expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, indicated through the use of words or
phrases such as "will likely result," "are expected to," "will continue," "is
anticipated," "estimated," "intends," "plans," "believes" and "projects") may
be forward-looking and may involve estimates and uncertainties which could
cause actual results to differ materially from those expressed in the
forward-looking statements. These statements include, but are not limited to,
our expectations regarding, our ability to raise additional capital and close
on our planned acquisition of additional magnesium production facilities, our
ability to position ourselves as a leading global supplier of pure magnesium
and our ability to monetize our investment in our magnesium segment.
We caution that the factors described herein could cause actual results to
differ materially from those expressed in any forward-looking statements we
make and that investors should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which such statement is made, and we undertake no obligation
to update any forward-looking statement to reflect events or circumstances
after the date on which such statement is made or to reflect the occurrence of
anticipated or unanticipated events or circumstances. New factors emerge from
time to time, and it is not possible for us to predict all of such factors.
Further, we cannot assess the impact of each such factor on our results of
operations or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statements. This press release is qualified in its entirety by
the cautionary statements and risk factor disclosure contained in our
Securities and Exchange Commission filings, including our Annual Report on
Form 10-K for the year ended December 31, 2008 and our reports on Form 10-Q.

CONTACT: China Direct Industries, Inc., Richard Galterio or Lillian Wong,
Investor Relations, Phone: 1-877-China-57, Email: richard.galterio@cdii.net,
lillian.wong@cdii.net

SOURCE China Direct Industries, Inc.

China Direct Industries, Inc., Richard Galterio or Lillian Wong, Investor
Relations, Phone: 1-877-China-57, Email: richard.galterio@cdii.net,
lillian.wong@cdii.net