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China Graphite (02237) subsidiary has signed framework agreements with four companies regarding potential investment and business cooperation in graphite

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China Graphite (02237) announced that on June 17, 2024, its indirectly wholly-owned subsidiary Heilongjiang Baoquanling Agricultural Reclamation Yixiang New Energy Materials Co., Ltd. (Yixiang New Energy) entered into four non legally binding framework agreements with Qingdao Xintaihe Nano Technology Co., Ltd. (Qingdao Xintaihe), Beijing Chuangshi Hongjing Investment Consulting Co., Ltd. (Beijing Chuangshi), Beijing Zhongjing Ruiji Biotechnology Co., Ltd. (Beijing Zhongjing), and AST (Hong Kong) Technologies Limited (AST), respectively, regarding potential investment in a graphite mine located about 28 kilometers northwest of Luobei County, Heilongjiang Province (the group obtained them in 2019). Production facilities and operations of mining rights (Beishan Mine) and potential business cooperation in supplying graphite products to Qingdao Xintai.

According to the framework agreement and on the premise of entering into a formal agreement with the contracting parties, Qingdao Xintaihe, Beijing Chuangshi, Beijing Zhongjing, AST or other designated parties suggest investing RMB 10 million (a total of RMB 40 million) in the construction and operation of the production facilities of the Beishan Mine through the contracting parties to invest the debt, equity or other means of individual agreements in Yixiang New Energy. In addition, to further enhance the business relationship between Yixiang New Energy and Qingdao Xintaihe, Yixiang New Energy will supply graphite products to Qingdao Xintaihe, with a recommended quantity of no less than 10000 metric tons per year. The selling price will be determined by both parties based on market conditions.

The announcement states that seeking external funding from time to time to ensure sufficient funds to develop mines and build production equipment to seize market opportunities is beneficial for the group. In addition, proposing investment and business cooperation with Qingdao Xintai, the existing downstream customer of the group, can also create synergies to ensure the group's external sales and supply of graphite products for its production.

If the proposed investment and/or business cooperation between Yixiang New Energy and Qingdao Xintaihe, Beijing Chuangshi, Beijing Zhongjing, and AST can be implemented, it can demonstrate the capital strength of the group's development and ensure that the business cooperation with downstream customers Qingdao Xintaihe is in line with the overall interests of the company and shareholders.

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