GRAPHEX GROUP (06128) plans to cooperate with the People's Government of Nanshu Town again to further promote the development of the new energy lithium battery industry in Nanshu Town.

GRAPHEX GROUP (06128) announced that the group will cooperate with the People's Government of Nanshou Town, Laixi City, Qingdao City, Shandong Province, People's Republic of China on multiple projects related to the production and processing of lithium battery cathode materials starting from 2023. Recently, the company plans to collaborate again with the People's Government of Nanshou Town to advance the second phase of the project in Nanshou Town, further promoting the development of the lithium battery new energy industry in Nanshou Town. The company and the People's Government of Nanshou Town intend to jointly build the second phase of the graphite deep processing project in the graphite industry cluster zone of Nanshou Town. The estimated investment amount for the second phase project is RMB 2 billion, with the main focus on the production and processing of lithium battery cathode materials. As a partner, the People's Government of Nanshou Town will provide the group with various preferential policies and a favorable business environment, and assist the group in applying for various licenses, planning, environmental assessments, etc. for the second phase project. In return, the group is required to invest in the second phase project and pay taxes to the People's Government of Nanshou Town. The contracting parties also intend to acquire a piece of land measuring 80 acres (approximately 53,280 square meters) in Nanshou Town through bidding and auction for the operation of the second phase project. It is expected that after all relevant plans and approvals are prepared, the land can be tendered and auctioned within 6 months. If the company successfully acquires the land, the second phase project is expected to start construction 4 to 6 months after the land auction. The construction area of the second phase project is approximately 50,000 square meters. It is estimated that after the completion of the second phase project, and upon passing the energy assessment and environmental assessment, the annual production of natural graphite cathode materials will be 20,000 tons, and the annual output value will be approximately RMB 1 billion. The contracting parties will establish a joint working group to complete the necessary preparatory work before the land tender and auction. In addition, the contracting parties intend to further enter into a "Land Cooperation Agreement between the People's Government of Nanshou Town and Xishidian Electric Vehicle New Materials Holdings Limited" to record the respective responsibilities of the contracting parties in operating the land. The company encountered several challenges in the first phase of the project. In August 2024, the company obtained the energy permit for the first phase of the project and is awaiting approval for the environmental permit. However, the company was informed by the local power supply bureau that the current electricity supply is insufficient for the factory in the first phase project to operate. The company has consulted a local power engineering company on this issue and is in discussions with the owner and the People's Government of Nanshou Town regarding possible remedies. Due to this situation, the implementation of the first phase project will be delayed. The company plans to resolve this issue by the end of 2024.