Sinomine Resource Group Co.Ltd(002738)
On the application of funds raised by non-public offering of shares in 2022
Feasibility analysis report
1、 Investment plan of the raised funds
The total amount of funds raised from this non-public offering of shares does not exceed 300 million yuan (including this amount). After deducting the issuance expenses, the net amount of funds raised is planned to be invested in the following projects:
Unit: 10000 yuan
No. project name total investment proposed to use raised funds
1 Chunpeng lithium project with an annual output of 35000 tons of high-purity lithium salt 100 China High-Speed Railway Technology Co.Ltd(000008) 100000
2. 2 million T / a construction project of bikita lithium mine in Zimbabwe 127338009800000
3. 1.2 million T / a reconstruction and expansion project of bikita lithium mine in Zimbabwe 36421003292000
4. Supplementary working capital 8808 Weichai Heavy Machinery Co.Ltd(000880) 8000
Total 351839 Jinzai Food Group Co.Ltd(003000) 0000
After the funds raised from this non-public offering are in place, the company will invest the raised funds in the above projects according to the actual needs and priorities of the project. The part of the total investment amount of the project higher than the use amount of the raised funds will be raised by the company. If the net amount of the actual raised funds after deducting the issuance expenses is lower than the total amount of the raised funds to be invested, the insufficient part will be raised by the company.
Before the funds raised from this non-public offering are in place, the company will make early investment with self raised funds according to the needs of the project, and replace the early investment funds in accordance with the requirements and procedures of relevant laws and regulations after the raised funds are in place.
2、 Background of the application of the raised funds
(I) the demand for lithium batteries accelerated, driving the growth of lithium salt demand
With the continuous development of electronic products such as computers, digital cameras, mobile phones and mobile electric tools, as well as the continuous maturity of new energy vehicle technology and energy storage and the continuous explosive growth of output, the consumption of lithium products in the lithium battery industry has increased year by year, and the proportion of lithium consumption in the battery industry has increased from 35% in 2015 to 74% in 2021. The application and proportion of lithium products in relevant industries around the world are shown in the figure below:
Application and proportion of lithium products in 20152021 1 1
Battery ceramic and glass lubricant casting flux polymer refrigeration and air purification others
100% 5% 4%
10% 10% 9% 6% 1% 6% 21%%
2% 3% 21%% 2%
90% 5% 3% 2% 4% 3% 2% 3%
5% 5% 3% 5% 4%
4% 4% 6% 14%
80% 5% 5% 14%
7% 18%
9% 8%
70% 23%
60% 27%
30%
50% 32%
40%
71% 74%
30% 65%
56%
46%
20% 35% 39%
10%
0%
2015 2016 2017 2018 2019 2020 2021
With the global restrictions on the use of fossil fuels and the reduction of carbon dioxide emissions, the sales volume of new energy vehicles has increased significantly, and power batteries have replaced consumer batteries as the main driving force, driving the rapid growth of global lithium consumption.
In the future, the rapid development of new energy vehicle industry will drive the rapid expansion of power battery demand and support the demand for lithium. In 2021, the global new energy vehicles were fully promoted, and European and American countries increased their support for new energy vehicles. The global new energy vehicle sales increased rapidly and the penetration rate increased significantly. In order to seize market share, battery enterprises began to expand production, the installed capacity of lithium battery increased significantly, the demand for lithium increased rapidly, and the price of lithium products increased accordingly.
(II) the amount of lithium ore in the upstream is slow and the supply of lithium salt is tight
Global lithium resources are unevenly distributed. The sum of lithium resources in the “lithium triangle” region of South America (high-altitude lakes and salt marshes at the junction of Chile, Argentina and Bolivia) accounts for about 56% of the total global lithium resources. Other countries with rich resources include Australia, the United States and China. The distribution of world lithium resources is shown in the figure below:
1. Data source: USGS MINERALCOMMODITY SU MMARIES( 20162022)
Distribution of world lithium resources 2
Other Canada
3% 17%
bolivia
24%
China
6%
Australia
8% Argentina
Us 21%
10% Chile
11%
However, although Bolivia and Argentina in the lithium triangle region of South America rank among the top two in the world in terms of resources, due to factors such as geographical environment, resource nationalization, geopolitical risks and technology, their development degree is low and their output release is less; In Australia, due to the decline in lithium salt prices from 2018 to 2020, many enterprises lost money, and some mines were forced to shut down. In addition, the local investment environment is tightening, and the release of output is limited. In 2021, the downstream demand increased, the lithium salt products in the middle reaches consumed too fast, the ore supply in the upstream was in short supply, and the tight supply and demand in the industrial chain stimulated the continuous rise of the price of lithium salt products.
(III) production and marketing are bound, and the global competition for resources is intense
The long-term tight supply of lithium salt highlights the strategic importance of lithium mineral resources. Midstream lithium salt manufacturers and downstream battery and new energy vehicle enterprises directly lock in the upstream lithium mineral resources through underwriting. At present, the lithium concentrate produced by large-scale mines in Western Australia has been fully underwritten to its shareholders, lithium salt enterprises and automobile manufacturers, and only a small part is sold in the form of loose orders. The underwriting of main mines is as follows 3:
Name of lithium ore reserves capacity and underwriting of lithium concentrate
(10000 tons) (10000 tons / year)
Greenbushes 878lce has an existing production capacity of 1.34 million tons, with Tianqi Lithium Corporation(002466) and American Yabao underwriting 50% respectively
It is planned to expand to 1.94 million tons
MT Marion 242lce 45 Ganfeng Lithium Co.Ltd(002460) 100% underwriting or processing and sales
Source: USGS 2 MINERALCOMMODITY SUMMARIES(2022)
3. Source: announcements of various companies
Name of lithium ore reserves capacity and underwriting of lithium concentrate
(10000 tons) (10000 tons / year)
MT cattlin 33lce 22 Sichuan Yahua Industrial Group Co.Ltd(002497) underwrites 120000 tons, Chengxin Lithium Group Co.Ltd(002240) underwrites 60000 tons
The existing production capacity is 330000 tons, with an estimated Ganfeng Lithium Co.Ltd(002460) underwriting capacity of 160000 tons. After the second phase is put into operation, the underwriting capacity of pilgangoora 693lce is increased, and it is planned to expand to 800000 tons and 150000 tons; Tianyi lithium industry underwrites 115000 tons, Ronghui lithium industry underwrites 120000 tons, and Great Wall Motor Company Limited(601633) underwrites 20000 tons
Therefore, for lithium salt production enterprises, obtaining upstream lithium resources and ensuring adequate supply of raw materials have become the top priority to maintain the development of enterprises.
3、 Necessity and feasibility of project implementation with raised funds
(I) necessity of implementation of projects invested with raised funds
1. Expand lithium salt production capacity and further improve profitability
In 2019 and 2020, the company has a capacity of 3000 tons / year of battery grade lithium fluoride and 6000 tons / year of battery grade lithium carbonate. In August 2021, the 25000 T / a battery grade lithium hydroxide and lithium carbonate project of the company was completed and entered the trial production stage. At the end of 2021, the company completed the reconstruction and expansion of battery grade lithium fluoride production line, increased the production capacity to 6000 tons / year, and began trial production in 2022. As some products of the 25000 T / a battery grade lithium hydroxide and lithium carbonate project are used as raw materials of the battery grade lithium fluoride production line, the internal utilization factors of this part need to be deducted when calculating the lithium salt capacity of the company. Therefore, the total lithium salt capacity of the company at this stage is 31000 T / A, but there is still a certain gap compared with the leading enterprises in the industry. Through the investment and construction of this raised investment project, the company will further increase the lithium salt production capacity by 35000 tons / year. At that time, the total production capacity will reach 66000 tons / year, entering the forefront of the industry. The company’s competitive advantage will be further enhanced and its profitability will be further improved.
2. Arrange the upstream lithium mine to escort the expansion of lithium salt production
With the increase of lithium salt production capacity of the company
