Chuaneng Power plans to buy 62.75% equity of Lithium Industry for 927 million to postpone the acquisition of 51% stake in Shengsheng Lithium Industry.

SMM: on the evening of November 12, Chuaneng Power announced that in order to speed up the development of the company's lithium industry, the company plans to invest 927 million yuan to acquire the 62.75% stake in Sichuan Neng Lithium Industry Co., Ltd. (referred to as "Sichuan Lithium Fund") held by Chengdu Chuaneng Lithium Equity Investment Fund Partnership (referred to as "Chuan Neng Lithium Fund").

Chuaneng Lithium Energy Fund is a partnership controlled by Sichuan Energy Investment Group Co., Ltd., the controlling shareholder of the company.

The announcement shows that owners who can invest in lithium should be engaged in the development, production and sales of lithium mineral resources, basic lithium salt products, metal lithium and other lithium products in the upper reaches of the lithium industry. As of May 31, the audited total assets of the lithium investment industry was 538 million yuan, the total liabilities were 15.0021 million yuan, and the total net assets were 523 million yuan. From January to May, the lithium industry achieved an operating income of 2.8889 million yuan and a net profit loss of 1.8756 million yuan.

It is reported that the Lijiagou mining area where the lithium industry is located has been explored and identified to have ore reserves of 40.36 million tons and lithium oxide (Li2O) reserves of 510000 tons, with an average grade of 1.30%. It is a rare rare metal lithium ore with huge reserves, excellent grade, good ore processing and metallurgical performance, and high value of comprehensive utilization of resources. The 1.05 million tons / year mining and separation project of Lijiagou spodumene Mine under construction approved by the Sichuan Provincial Development and Reform Commission is the largest lithium ore mining and separation project in China at present. It is planned to handle 4200 tons of raw ore per day, with an annual treatment of 1.05 million tons of raw ore and an annual production of 180000 tons of concentrate.

On the same day, Chuaneng Power announced that it intended to suspend the acquisition of 51% of the shares held by Chuaneng Lithium Energy Fund. On November 21, 2019, the company signed the "Equity acquisition intention Agreement" (referred to as the "intention Agreement") with the Sichuan Lithium Energy Fund, and the company intends to transfer 51% of the shares held by the Sichuan Lithium Energy Fund. Since the signing of the agreement, the company has actively promoted the relevant work with the relevant parties, carried out due diligence, audit, evaluation and other work on the target company, and fully communicated and negotiated with the other party on various matters of the acquisition. Considering that the current profitability of the company cannot have a positive impact on the company's performance, and the 12-month validity period stipulated in the Equity purchase intention Agreement is approaching, in order to protect the interests of the company and all shareholders, after careful study at the 32nd meeting of the Seventh session of the Board of Directors held on November 12, 2020, the company decided to suspend the acquisition of 51% of the shares held by Chuaneng Lithium Fund, and the intention agreement will not be renewed after the expiration of the agreement.

In addition, the company received a letter from Sichuan Neng Investment, the controlling shareholder, on the same day, saying that Sichuan Neng Investment plans to directly allocate Sichuan Energy Lithium Energy Fund in the form of fund clearing, so that the company can directly hold a stake in Shengsheng Lithium Industry. After the liquidation of the fund, it is estimated that Sichuan can invest 21.42% of the shares, the company holds 25.5% of the shares, and Sichuan Neng Capital holding Co., Ltd. holds 4.08% of the shares, and the final shareholding is subject to the results of the fund liquidation. At the same time, Sichuan Neng Investment promised to transfer its shares to the company after the performance of the lithium industry meets the relevant requirements of the listed company.