[SMM report] Pengxin Resources: the Strategic Cooperation Agreement for the completion of the first Phase of the 7, 000-ton Cobalt hydroxide production Line ensures sales

SMM News: October 9, Pengxin Resources issued a notice that the company is located in the Democratic Republic of the Congo (au) Shitulu mining area with an annual production capacity of 7000 tons of cobalt hydroxide production line (of which the first phase is 3000 tons per year and the second phase is increased to 7000 tons per year). At present, the main body of the first phase of the project has been successfully completed on September 30, 2018.

It is reported that the project uses reliable and energy-saving equipment purchased from China. After completion, the main product is cobalt hydroxide (containing 35% cobalt), and the by-product cathode copper (LMEA grade) is produced at the same time. After reaching production, it can handle about 180000 tons of cobalt (associated copper) ore, 3000 tons of metal cobalt and more than 5000 tons of cathode copper.

Hituru Mining area, Democratic Republic of the Congo:

(photo: Pengxin Resources)

The main body of the first phase of the project has been completed by the end of September 2018, and the main process production workshop in October is mainly single machine or linkage debugging. It is expected to be put into trial production on October 30, 2018 and reach production in December.

Concentrator workshop:

(photo: Pengxin Resources)

While actively expanding production, Pengxin Resources is also actively ensuring sales with battery manufacturers. Recently (September 21), Pengxin Resources signed a strategic cooperation agreement with Dangsheng Technology. Dangsheng Technology will be provided with 30 per cent of the primary cobalt hydroxide produced by DRC SMCO as the cobalt raw material for the latter's production for a period of five years from the date of the first shipment. Both parties agree to be priced by the quotation of MetalBulletin, the specific pricing method and other purchase and sale terms shall be subject to the subsequent final purchase and sale contract, which will be formally signed after the commissioning of the SMCO cobalt hydroxide production line in the Democratic Republic of the Congo.

Core assets at the end of the mine: 9400 tons of cobalt reserves in the Democratic Republic of the Congo (au) Shituru Copper Mine

As one of the rising metal varieties in recent years, under the tide of new energy vehicles, cobalt has always been an important raw material. Because most of the cobalt mines are abroad, domestic enterprises are rapidly laying out overseas. Pengxin Resources is currently the core operating asset of the Democratic Republic of the Congo (au) Shitulu Copper Mine, which is located in the world-famous Katanga arc copper-cobalt metallogenic belt.

The total reserves of copper resources and cobalt resources are 154000 tons and 9400 tons, respectively. In order to guarantee the copper and cobalt ores required for the production of SMCO, the company has signed a lease agreement with the State Mining Corporation (GECAMINES S.A.) to obtain the 25-year lease development rights for the deposits of 217 blocks of (PE) under Mining license No. 1078.

Reserves of Shituru Copper Mine in the Democratic Republic of the Congo:

(source: Pengxin Resource Anxin Securities)

At the same time, according to the statistics of Guohai Securities, Pengxin Resources has set up a cobalt ore trading center in Likasi to carry out cobalt ore trade, warehousing, logistics and contracted development of mines. The company supports the operating resource reserves of the company's copper and cobalt mining business by renting mines of the National Mining Corporation (valid for a period of 25 years). At the same time, the company has also signed agreements with other manufacturers, including:

1) Vincent Mining is committed to supplying copper and cobalt concentrate to Hituru Mining, corresponding to not less than 5500 tons of copper and not less than 1500 tons of cobalt per year;

2) Gerald Metals or its local subsidiaries supply copper and cobalt ores (5 per cent to 6 per cent) for its production to subsidiaries of Pengxin Mining, with a supply of approximately 3000 tons of metal per year, with the expansion of the cobalt ore production line, The supply of cobalt ore should be about 7000 tons of metal per year.

Actively sign the long-term contract to ensure the production and Marketing of Cobalt

With the continuous release of cobalt production capacity of mining enterprises in various places, how to ensure that the market has gradually become another problem after the layout of cobalt mines, the recent strategic cooperation between Pengxin Resources and Dangsheng Science and Technology, Related to the field of new energy technology research and development, new product line construction and existing product line capacity expansion, mergers and acquisitions and other aspects, locked in the sale of cobalt hydroxide products, improve the industrial chain layout of Pengxin resources.

In fact, as early as last year, Pengxin Resources began to gradually establish partnerships with battery manufacturers and new energy companies. In November 2017, Pengxin Resources announced that The company and Shanghai Gepai New Energy Technology Co., Ltd. signed the "Strategic Cooperation Framework Agreement" a few days ago, the two sides intend to establish a long-term, comprehensive and stable strategic cooperative relationship in the field of new energy storage.

According to the announcement, the company will provide 30 per cent of the primary cobalt hydroxide produced by SMCO in the Congo to the cobalt raw materials needed for the production of new energy sources in Georgia for a period of five years from the date of the first shipment. At the same time, the two sides will cooperate in technology research and development in the field of new energy storage, construction of new product production lines, expansion of production capacity of existing product lines, mergers and acquisitions, and so on. Not only that, the two sides will also cooperate in financing at home and abroad, docking of domestic and foreign capital markets, investment mergers and acquisitions and capital operation plan design, so as to jointly promote the finance and capitalization of both sides.

GE Pai New Energy Technology Co., Ltd., full name of Shanghai GE Pai New Energy Technology Co., Ltd., is a comprehensive new energy material enterprise providing cobalt, lithium, nickel, manganese and other basic materials, ternary precursors and cathode materials for the new energy power battery industry. Gepai new energy layout Zhejiang Shangyu, Anhui Xiao County, Jiangxi Ganzhou, Vietnam Haiphong, the Democratic Republic of the Congo (DRC) and other five new energy power battery key materials and raw materials industrial base. Vertical layout from battery metal resources development, cobalt lithium nickel manganese chemical salt, ternary precursor, lithium cathode material, power battery cascade recycling complete industrial chain. To build a leading ecological circle of new energy power battery industry in the world. According to Georgia New Energy estimates, the comprehensive layout of the base 2020 target is 20000 tons of cobalt, 40000 tons of nickel, 50000 tons of lithium, 1000 tons of metal lithium, and 50000 tons of high nickel ternary cathode materials.

China, as a large country of cobalt smelting consumption in the world, with the global layout of domestic enterprises in the upper reaches of the mine in recent years, SMM believes that the increase in the voice of Chinese enterprises in cobalt supply is conducive to maintaining the smooth operation of cobalt prices.