Sinomine Resource Exploration Co., Ltd. Entered Lithium Raw Material Sector with Approved Acquisition and Reorganization

According to an announcement by Sinomine Resource on the evening of June 27, it received a notice from China Securities Regulatory Commission (CSRC) on June 27, indicating that the shares issuing, assets purchase by cash payment, supporting fund raising and related party transaction of Sinomine Resource were unconditionally adopted at the 31st review meeting of Acquisition and Reorganization Committee of CSRC held on June 27, 2018.

According to Sealand Securities, Jiangxi Dongpeng New Materials Co., Ltd., the proposed acquisition object, is a major supplier of lithium fluoride (as a crucial material of lithium-ion electrolyte hexafluorophosphate lithium) and the largest producer and supplier of se salt and ru salt in China.

Dongpeng New Materials has an existing production capacity of 1,000 ton lithium fluoride, which is expected to reach 3,000 ton in the future. In 2016, it successfully developed the technology of extracting lithium hydroxide from petalite. Currently, it plans to construct a production line with capacity of 15,000 ton battery-grade lithium hydroxide and 10,000 ton battery-grade lithium carbonate, which has the ability to extract lithium hydroxide from petalite. The successful operation of the production line is expected to save production cost to some extent for Dongpeng New Materials in the future.

Meanwhile, as one of the companies in China with the capability of mass production of se salt and ru salt, Dongpeng New Materials has established outstanding industry position and brand awareness in the market segment, with a market share of 75% in China. According to public disclosure, the operating income of Dongpeng New Materials in 2016 and 2017 were RMB 537 million and RMB 518 million respectively, and net profit of RMB 167 million and RMB 146 million.

According to Sinomine Resource, the completion of the acquisition of Dongpeng New Materials will improve its quality of assets, financial situation and sustained profitability.