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Sinomine Group Successfully Issued RMB 800 Million Convertible Bonds

Addtime:2020-07-10 16:38:00

Recently, Sinomine Resource Group Co., Ltd. (hereinafter referred to as "SINOMINE " or "the Company") has achieved excellent results in the in-depth development of "going out" overseas. SINOMINE (002738) successfully issued convertible bonds and raised RMB 800 million, which was used to replace the Company's investment in acquisition of Cabot Special Fluids department. The acquisition of Cabot Special Fluids department is to further improve the strategic layout of the cesium and rubidium industry chain as well as to rapidly expand the global market and make a solid step again.

SINOMINE has been committed to the construction of the mining industry chain for a long time. SINOMINE is the main supplier of battery-grade lithium fluoride and the largest manufacturer and supplier of cesium and rubidium brine in China. The Company owns 80% of the world's indicated cesium reserves and is the only scientific and technological innovation enterprise in the world to open up the cesium resource industrial chain. It is also the only supplier of cesium formate used in high temperature and high-pressure oil & gas industry. At the same time, SINOMINE has a professional  technical and management team in terms of oversea exploration, ranking the top in overseas solid mineral exploration. In June 2019, the company launched the plan for public issuance of A-share convertible corporate bonds, which was officially approved by the CSRC on May 27, 2020. The investment projects of the raised funds issued by the company conform to the national industrial policy, industry development trend, and strategic development direction of the company. At present, cesium and rubidium brine are widely used in the developed countries such as Europe and the United States. However, due to the lack of cesium resources and other reasons, the application of cesium brine in China is still at the initial stage, and the market potential is huge. According to the prediction of the State Key Laboratory of powder metallurgy of Central South University, in the next five to ten years, with the progress of science and technology in China and the improvement of high-quality demand for products in related fields, cesium and rubidium products are expected to take the lead in expanding the application in the fields of chemical industry, oil & gas industry and tele-communication. It is expected to rapidly form a 10 billion value industry with the support of national policies on environmental protection, energy, information, science, and technology scale, the Company will benefit directly.

The convertible bonds to be issued this time can be converted into A shares of Sinomine. The total value is amount to RMB 800 million and the total number of issues is 8million. The term of issue is six years from the date of issuance. The period of conversion is from the first trading day six months after the end of the issuance of the convertible bonds to the maturity date of the convertible bonds. The bond interest rate is: 0.50% in the first year, 0.70% in the second year, 1.20% in the third year, 1.80% in the fourth year, 2.50% in the fifth year, and 3.00% in the sixth year. The interest is paid once a year, and the principal and interest of the last year are returned. Due to the low interest rate, it can significantly reduce the financing cost of the company, effectively optimize the company's capital structure, enhance the sustainable profitability and anti-risk ability, enhance the comprehensive competitiveness of the company, and lay a solid foundation for the long-term sustainable development of the company.

This operation is another strategic measure of SINOMINE after completing the acquisition of Dengpeng New Material, the main supplier of domestic battery grade lithium fluoride and the largest manufacturer & supplier of cesium and rubidium salt in China in 2018. It is reported that the other side of this transaction is Cabot (listing code CBT. N). The target company, Cabot Special Fluids Department, includes Tanco, CSF Inc, CSF Ltd and their respective subsidiaries. Its business covers the whole industrial chain of cesium, i.e. mining, FCC production, marketing and recycling. At present, there are only two commercial pollucite mine in the world, Bikita Mine in Zimbabwe and Tanco in Canada. The former one provides raw materials for Dongpeng new Material and Albemarle of the United States. The later one in Canada is 100% owned by Sinomine. As of June 2019, the volume of oxidized cesium at Tanco is equivalent to 31800 tons. The mine is operating and in production.

The target company of this acquisition has subsidiaries in the United States, Canada, the United Kingdom, Singapore and other places in the world. Its customers includes the well-known oil & gas service enterprises such as Halliburton, Schlumberger, shell, BP, and the leading chemical companies such as BASF and DuPont. It owns 109 international invention patents in the field of processing and application of cesium. The acquisition will be an important supplement to the company's global strategy and help the company to expand the global market rapidly.

With the rapid rise of new energy, new materials, new generation of information technology and other strategic emerging industries, the acquisition of rare strategic minerals has been brought into the game of great powers and become the focus of resource competition in the world. Cesium is a kind of powerful rare mineral, and its global ore reserves are very limited. Because cesium plays an important role in military industry, communication, oil and gas, chemical industry, medical and other fields, cesium has been listed as a key mineral by the United States, Japan and other countries. Due to the scarcity of cesium resources and its high technical barriers, there are very limited enterprises in the world that are capable of producing high-quality cesium and rubidium brine. Through the acquisition of the target company, the FCC business model of the company is upgraded to the whole process industrial chain of "cesium resource development + cesium chemical production and research and development + sales and service + cesium resource recovery", thus effectively improving the strategic layout of the industrial chain, laying a significant resource advantage in the cesium chemical business of the company, and further improving the sustainable development ability and resistance line Cyclical risk capability of the industry.

In recent years, SINOMINE Resource has extended to upstream mines and downstream processing of rare and light metals through M & A. the company's overall scale and capital strength have been improved year by year, with high profitability and low debt level. In 2019, the company achieved revenue of 1.165 billion yuan, a year-on-year increase of 34.34%. Net profit attributable to shareholders of listed companies was 140 million yuan, up 26.32% year on year. By the end of March 2020, the company's total assets are about 4 billion yuan, and the debt ratio is 32.96%.

It is worth mentioning that with the rapid development of new energy vehicles and lithium battery industry, lithium resources are being gradually developed and utilized, which has led to the exploration and development of lithium resources and associated metals. The target company not only has huge reserves of pollucite, but also has spodumene resources with a reserve of about 1.28 million tons to be developed (with 2.5% Li2O as the cut-off grade, the average Li2O content is 3.12%). Through this transaction, the company can provide a stable supply channel for its own lithium chemicals, cesium brine production and processing business, and give full play to the synergy effect from upstream mining, ore processing to product production and sales.

SINOMINE said that the company's strategic focus has shifted to the business segment of rare light metal raw materials (lithium, cesium, rubidium) with good development situation and huge development potential. The company will further increase the R & D and application field promotion of cesium and rubidium chemicals, and promote the large-scale development of cesium and rubidium new material industry. The company will actively promote the construction of lithium hydroxide production line to ensure the stable growth of lithium raw material supply and lithium chemical business. At the same time, the company will continue to maintain the leading position in overseas geological exploration, develop a number of promising projects, focus on the search for small mineral rights such as cesium, lithium, cobalt, tantalum and beryllium, do a good job in the medium and long-term layout of mineral rights investment, and to develop into an international mining group with the core business of rare and light metal resources development and utilization, geological exploration technology services, mineral rights investment and mining development 。