Securities code: Sichuan Yahua Industrial Group Co.Ltd(002497) securities abbreviation: Sichuan Yahua Industrial Group Co.Ltd(002497) Announcement No.: 202221 Sichuan Yahua Industrial Group Co.Ltd(002497)
Announcement on subscription of pre IPO equity of Australian aby company and signing of investment and share subscription agreement and off take and sales agreement
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Important content tips:
1. Yahua International Investment Development Co., Ltd., a wholly-owned subsidiary of the company, subscribed for 3.7 million shares of aby company in Australia, accounting for 3.4% of the total share capital of aby company before IPO.
2. This equity subscription is within the approval authority of the board of directors and does not need to be submitted to the general meeting of shareholders for deliberation.
3. This equity subscription of the company does not constitute a related party transaction, nor does it constitute a major asset reorganization specified in the administrative measures for major asset reorganization of listed companies.
1、 Overview of foreign investment
The wholly-owned subsidiary of Sichuan Yahua Industrial Group Co.Ltd(002497) (hereinafter referred to as ” Sichuan Yahua Industrial Group Co.Ltd(002497) ” or “the company”) Yahua International Investment Development Co., Ltd. (hereinafter referred to as “Yahua international”) intends to subscribe for 3.7 million shares of Australian Abyssinian Metals Limited (hereinafter referred to as “aby company”) at the price of a $0.75 per share, accounting for 3.4% of the total share capital of aby company before IPO. On February 27, 2022, both parties signed the investment and share subscription agreement and the off take and sale agreement.
The 10th meeting of the 5th board of directors of the company deliberated and approved the proposal on subscription of pre IPO equity of Australian aby company, and agreed to this share subscription. In accordance with the provisions of relevant systems such as the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board, the articles of association and the measures for the administration of foreign investment, this equity subscription is within the approval authority of the board of directors and does not need to be submitted to the general meeting of shareholders of the company for deliberation.
This equity subscription does not constitute a connected transaction, nor does it constitute a major asset reorganization as stipulated in the administrative measures for major asset reorganization of listed companies.
2、 Basic information of counterparty
(I) aby company
1. Company name: Abyssinian Metals Limited
2. Place of registration: Australia
3. Date of establishment: Clearview asset Pty Ltd was established on June 28, 2007 and renamed Abyssinian metals Pty Ltd on December 1, 2019, reflecting the business in the field of battery metals in East Africa.
Aby is a battery metal company registered in Australia. It has mineral resources in African countries such as Sudan and Ethiopia. The founder and core team of aby have rich experience in the development of major mines in Africa. The core assets are mainly kenticha lithium mine in Ethiopia (holding 51% equity). Among them, the mining of kenticha lithium mine began in 1990. The area has highly mineralized lithium cesium tantalum (LCT) pegmatite, with 67.4 million tons of lithium resources proven, and the average grade of Li2O is 1.03%. It is further exploring and developing the mineralized lithium resources, with a total resource range of 80-11 million tons, equivalent to more than 1 million tons of Li2O; The resources in the southern and Northern reserves have great potential for future growth, and the overall resource scale can be comparable to the pegmatites of talison, wodgina and other projects in Australia. The overall technical and operation team of kenticha lithium mine comes from the former Galaxy lithium industry in Australia and has long-term good cooperation with Sichuan Yahua Industrial Group Co.Ltd(002497) the lithium concentrate of phase I 200000 t / a (equivalent to 30000 T / a of Li2CO3 equivalent) production line will be delivered in the second quarter of 2023, and the mine life is expected to exceed 18 years.
(II) main financial indicators
As of June 30, 2021, the total assets of the company are $7 million, and the equity financing of $15 million has been increased recently. The net assets of the company are now about $20 million.
3、 Main contents of investment and share subscription agreement and purchase and sale agreement
(I) main contents of investment and share subscription agreement
Yahua international subscribed 3.7 million shares of aby company at a $0.75 per share, a total of a $2.775 million, accounting for 3.4% of the total share capital of aby company before IPO. The subscribed shares enjoy the same status as all other issued ordinary shares of aby company.
Six months before the first production of the products of the kentica project, Yahua international promises to irrevocably pay an advance payment of US $40 million to aby company; Both parties will separately negotiate the detailed time schedule for the deduction of the advance payment from the payment before paying the advance payment.
(II) main contents of off take and sales agreement
1. Performance period
Aby company develops the kentica project in Oromia state in southern Ethiopia and sells and delivers lithium concentrate products to Yahua international. The agreement is valid from the date when aby company notifies the products to be ready for shipment to December 31, 2025. Unless otherwise notified by aby before the end date, the parties agree that this Agreement shall be automatically extended for 2 years from the end date.
2. Purchased products and quantity
Aby company provides no less than 120000 tons of lithium concentrate every 12 monthly contract years. If aby company has excess lithium concentrate in the future, both parties can provide additional lithium concentrate for Yahua international under the conditions agreed in writing.
3. Purchase price
Aby and Yahua international will negotiate with reference to the price of lithium concentrate based on 6.0% Li2O published on relevant market websites no later than 3 months before the expected delivery date of lithium concentrate, and reach an agreement on the price of relevant batches of goods.
4、 Impact of this investment on the company
With the commissioning of the kenticha project, the pre IPO equity subscription and the acquisition of the underwriting right of lithium concentrate will open up new guarantee channels for the company in the upstream resource end of the lithium industry. At the same time, it can also share the excess earnings after the listing of Australian aby company, which will have a positive impact on the company’s future operating performance, which is in line with the interests of the company and shareholders. 5、 Risk tips
The pre IPO equity subscription aims to lock in the lithium concentrate underwriting right of the kentica project and provide sufficient lithium resources for the future development of the company’s lithium industry. However, due to the impact of international political, economic environment, industrial policies, market fluctuations and other aspects, the project progress may not meet expectations, and there are certain uncertainties in investment income and off take. The company will timely perform the obligation of information disclosure in strict accordance with the provisions and requirements of relevant laws and regulations and the follow-up progress of the matter. Please make careful decisions and pay attention to investment risks.
6、 Documents for future reference
1. Resolution of the 10th meeting of the 5th board of directors
2. Resolution of the 10th meeting of the 5th board of supervisors
3. Independent opinions of independent directors on matters related to the 10th meeting of the 5th board of directors
4. Investment and share subscription agreement
5. Off take and sale agreement
It is hereby announced.
Sichuan Yahua Industrial Group Co.Ltd(002497) board of directors February 27, 2022
