Chuanfa dragon python power upstream phosphate rock resources! It is proposed to buy 100% equity of Tianrui Mining Industry with 956 million yuan.

On the evening of January 14, Chuanfa Dragon Python (002312) announced that the company intends to issue shares to Chuanfa Mining and Sichuan Salt Industry to buy its 80 per cent and 20 per cent shares in Tianrui Mining respectively. Taking June 30, 2021 as the evaluation benchmark, the 100% equity stake in Tianrui Mining is valued at 956 million yuan. After friendly negotiation between the parties to the transaction, the consideration for the 100% equity stake in Tianrui Mining is determined to be 956 million yuan.

Data show that Chuanfa Dragon Python was established in 1997, the controlling shareholder is Chuanfa Mining, a wholly owned subsidiary of Sichuan Development (holding) Co., Ltd., and the actual control is Sichuan SASAC. As the only industrial and capital operation platform for Sichuan's development in the mining and chemical industry, the company focuses on the fine phosphate field, with industrial-grade monoammonium phosphate and feed-grade calcium hydrogen phosphate as the core products, through the mode of "combination of fertilizer and salt and cascade development", supporting the production of fertilizer-grade phosphate and compound fertilizer to maximize the benefit of fine phosphate and fertilizer phosphate.

At the same time, Chuanfa Dragon Python is Synchronize to promote the implementation of iron phosphate and lithium iron phosphate new materials projects. The Industrial Project Investment Framework Agreement has been signed with the Zekou subdistrict office of Qianjiang City, and the Investment Framework Agreement has been signed with the Management Committee of Panzhihua Vanadium-Titanium High-tech Industrial Development Zone.

In the process of the above-mentioned business, phosphate rock is the main raw material for the main business of Chuanfa dragon python. Because the average grade of phosphate rock resources in China is low, the transportation cost is high, and the inter-provincial transportation is less, the control of short-distance phosphate rock resources by production enterprises will affect their profitability and competitive advantage. Domestic listed phosphorus chemical enterprises, such as Yuntianhua and Chuanheng shares, all rely on their own short-distance phosphate rock resources as an important barrier to competition.

Chuanfa dragon python currently has production bases in Mianzhu, Sichuan and Xiangyang, Hubei, respectively, among which Mianzhu has a phosphate production capacity of 1.8 million tons, which is the company's main production base of chemical fertilizer, compound fertilizer and industrial-grade monoammonium phosphate. However, due to the fact that the company's phosphate rock in Mianzhu, Sichuan Province is closed due to the influence of the Panda Protection Zone, all the phosphate rocks used in the Mianzhu production base need external procurement, and more than 2 million tons of phosphate ore need to be purchased every year. Stable access to phosphate rock resources in Sichuan Province will become an important part of the company's follow-up competitiveness.

Tianrui Mining Co., Ltd., which is 100% owned by Chuanfa Dragon Python, is mainly engaged in the mining and sales of phosphate ore, and has the phosphate rock resources in the Ridge (No. 8 ore block) of the Copper Plant of Laoheba Phosphate Mine in Sichuan Province. it is the mining right resource with the largest reserves in Mabian area of Sichuan Province, and has obtained the mining license corresponding to phosphate rock with a production scale of 2.5 million tons per year. Tianrui Mining and Sichuan Dragon Python phosphorus Chemical Co., Ltd., a wholly-owned subsidiary of the company, are the upstream and downstream of the industry. in recent years, Tianrui Mining is the main supplier of phosphate rock, the main raw material of dragon python phosphorus chemical industry. Tianrui Mining provides phosphate rock transportation distance, low cost, stable output and low impurity content of phosphate rock, which has contributed greatly to the rapid increase of industrial-grade monoammonium phosphate production capacity of the company in recent years.

Chuanfa Dragon Python said that this acquisition of Tianrui Mining will help listed companies directly obtain high-quality and scarce phosphate rock resources in Sichuan Province, improve the company's phosphorus chemical industry chain, further enhance the guarantee capacity of upstream phosphate rock resources in the company's main production bases, reduce related party transactions, reduce dependence on outsourced phosphate ore and reduce the adverse impact of phosphate ore price fluctuations on the company's profitability. To enhance the overall value and core competitive advantage of the phosphorus chemical industry chain of listed companies is in line with the company's "mineralization integration" development strategy.

In addition, based on the evaluation report issued by the evaluation institution on Tianrui Mining, Chuanfa Mining and Sichuan Salt Industry made corresponding performance commitments to listed companies on the mining rights caliber performance of Tianrui Mining during the forecast period. Chuanfa Mining and Sichuan Salt Industry promise that the cumulative net profit of Tianrui Mining Industry after deducting non-recurrent profits and losses in the next three years is not less than 311 million yuan, of which the audited net profits after deducting non-recurrent profits and losses under the mining rights caliber of 2022,2023 and 2024 are not less than 74.56 million yuan, 104 million yuan and 133 million yuan, respectively.