Shengxin Lithium Energy plans to jointly invest US $350 million to expand Lithium Salt production to acquire Argentine Lithium Salt Lake assets

On the evening of September 23rd, Shengxin Lithium Energy (002240) announced that Shengxin International, a wholly-owned grandson, intends to set up a joint venture with STELLAR in Indonesia to invest in the construction of a project with an annual production capacity of 50, 000 tons of lithium hydroxide and 10, 000 tons of lithium carbonate in (IMIP), Morowali County, Central Sulawesi Province, with a total investment of about US $350 million. Shengxin International holds a 65% stake in the joint venture company. The company said that this investment will greatly expand the production capacity of the company's lithium salt business.

Shengxin International and STELLAR agree that it is in line with the strategic development of all parties and the strategic needs of the global market to carry out deep processing of lithium carbonate and lithium hydroxide in Indonesia, to create a world competitive lithium raw material manufacturing system for new energy power batteries, and to build a world advanced manufacturing base for power battery raw materials.

According to the information on the official website of Shengxin Lithium Energy, the company's lithium salt business is implemented by its subsidiary Zhiyuan Lithium Industry and Suining Shengxin, of which Zhiyuan Lithium Industry has an annual production capacity of 40,000 tons of lithium salt (including 25000 tons of lithium carbonate and 15000 tons of lithium hydroxide). Has been completed in the fourth quarter of 2020; Suining Sheng's new design capacity of 30, 000 tons of lithium salt, the first phase of the annual production of 20, 000 tons of lithium hydroxide project has started construction at the end of 2020.

In terms of mineral resources, in 2019, Shengxin Lithium can complete the acquisition of Oyino Mining, which is located in Jinchuan County, Aba Prefecture, Sichuan Province, with a newly explored ore volume of 8.579 million tons and a raw ore production scale of 405000 tons per year. In addition, the company has also signed long-term off-take agreements with overseas lithium mining companies such as Galaxy Lithium Industry and AVZ Mining.

In order to further enhance the protection of upstream lithium ore resources, Sheng Xin LiNeng also announced on September 23 that Shengwei International, a wholly owned Hong Kong subsidiary of the company, intends to purchase 100% stake in SESA held by Huayou International on the delivery date and Huayou International's shareholder borrowing claims on SESA at a transaction price of $37.6689 million (about 240 million yuan).

SESA and PLASA of Argentina signed a corporate consortium contract on May 6, 2016, under which each holds 50% of the equity shares of the UT consortium, SESA is the operator of the UT consortium, and the UT consortium operates the Argentine SDLA Project / Diablillos Salt Lake (hereinafter referred to as the "SDLA Project").

Data show that the SDLA project is located in the northern Argentine province of Salta, with a current production capacity of 2500 tons of lithium carbonate equivalent. SESA also owns two mining rights, MinaMaricruz I (File No. 21.041) and Mina Centenarito (File No. 17.998), which have not yet been developed.

Huayou International is a wholly owned subsidiary of Zhejiang Huayou Cobalt Co., Ltd. (603799), a listed A-share company. Hanaq was founded and served as CEO by Tang Xiaohuan, a Chinese businessman, with projects such as lithium salt lake, precious metals, non-ferrous metals and so on.

Huayou International signed a "debt and equity transfer and irrevocable capital reduction contract" with Hanaq. Hanaq transferred 30% of its equity and creditor's rights in the target company to Huayou International. After the completion of the capital reduction contract, Huayou International will hold 100% equity in the target company. The equity and debt of the target company acquired by Shengwei International shall be delivered after the completion of the above-mentioned capital reduction contract.

After the completion of this acquisition, Shengxin LiNeng will indirectly hold a 100% stake in SESA and have the right to operate the UT consortium through SESA, which operates the SDLA project in Argentina.

Sheng Xin LiNeng said that in order to further expand the development and operation of upstream lithium resources, this acquisition is conducive to improving the company's layout in the field of new energy materials and in line with the company's strategic development plan. help to enhance the company's competitiveness in the field of new energy materials and enhance the company's profitability. At the same time, based on the good expectations of both sides for the development of lithium power new energy industry, as well as the close strategic cooperation between the two sides in the upper and lower reaches of the industrial chain, the two sides intend to carry out in-depth cooperation in lithium ore resources development, lithium salt production and supply, lithium electricity materials and other aspects to promote common development.