Transformation,And,Deployments,Made,By,Sino,Mine,Resource,Group,In,Rubidium,,Cesium,And,Lithium,Resources

Transformation And Deployments Made By Sino Mine Resource Group In Rubidium, Cesium And Lithium Resources

Sino Mine Resource Group was formerly a leading enterprise in geological exploration technical services. In recent years, the Company seized opportunities to acquire resources, and swiftly made transformation and developed into Top 1 cesium rubidium product supplier globally and the biggest battery-grade lithium fluoride nationwide. The Company has shaped a “troika” business structure of geological prospecting + cesium rubidium salt + lithium salt. The example that the Company has rapidly, accurately and effectively integrated cesium, rubidium and lithium salt industry chain is worth everyone’s discussing and studying.

Sino Mine Resource Group was formerly Beijing Kaifuyuan Geological Exploration Co., Ltd. that was established in 1999. The Company finished shareholding system reform in 2008, and got listed in Shenzhen Stock Exchange in 2014, becoming the first share in geological exploration in A-share market. As one of the first Chinese commercial comprehensive geological exploration technology service enterprises that “Go Global”, Sino Mine Resource Group is equipped with intensive technologies and years of precious experience.

In recent years, the Company has swiftly made transformation and developed into Top 1 cesium rubidium product supplier globally and the biggest battery-grade lithium fluoride nationwide by acquiring companies and making deployments in resource and full processing industry chain. The Company has shaped a “troika” business structure of geological prospecting + cesium rubidium salt + lithium salt.

(1) Acquring Jiangxi Dongpeng New Materials to enter light rare metal industry

The Company acquired Dongpeng New Materials in 2018, the biggest domestic cesium rubidium salt manufacturer and suppliers and the most important lithium fluoride manufacturer. The acquisition indicates the Company’s goal to enter rare metal business. Dongpeng New Materials is an advanced Chinese manufacturer dedicated to industrial production of high purity powder, such as lithium, rubidium, cesium. Sino Mine Resource Group aims to use this opportunity to transform from a pure exploration company to an integrated company dedicated to development and smelting of light and rare metal minerals.

(2) Acquring Special Fluid Division of Cabot to establish its leading position in cesium rubidium industry

For the purpose of further optimizing supply chain and enhancing guarantee ability and competitiveness at resource end, the Company acquired 100% equity of Special Fluid Division CSF of Cabot. This helped the Company to obtain the mining right of Tanco, the globally biggest cesium garnet ore, which not only improves upstream cesium resource and lithium resource, but also completes the construction of cesium full industry chain covering “cesium resource exploration + cesium salt development and production + sales and service + cesium resource recycling”. The Company has since become a global manufacture boasting perfect cesium industry chain as well as a globally leading company in cesium rubidium salt fine chemical industry.

(3) Acquring Bikita Ore to develop into an integrated company in lithium battery new material field

Dongpeng New Materials is a leading domestic lithium fluoride company. After acquiring Dongpeng New Materials in 2018, Sino Mine Resource Group has initiated technical transformation and has developed 6000 tons of lithium fluoride capacity. Additionally, the Company has developed and maintained a lot of quality lithium battery and NEV customers, and succeeded in becoming a member of supply chain for Tesla. Using this great opportunity, the Company accomplished a flexible battery-grade lithium hydroxide/lithium carbonate production line with the capacity of 25000 tons in 2021, and the capacity has successfully been achieved (15000 tons of lithium hydroxide monohydrate and 10000 tons of battery-grade lithium carbonate). This is a great breakthrough from “0” to “1” for the Company in terms of its lithium carbonate and lithium hydroxide monohydrate business.

Furthermore, in February, 2022, the Company acquired Bikita lithium ore 100% in Zimbabwe, further consolidating its lithium salt business. After building a solid foundation in upstream lithium ore resource supplying, the Company started to steadily extending lithium salt strategies by constructing an additional lithium salt capacity of 35000 tons. With the completion and commissioning of newly constructed lithium salt and lithium ore capacity, the Company’s lithium salt product and lithium ore self-sufficiency rate will be greatly improved, which drives the Company to grow into an integrated SRDI (specialized, refinement, differential, innovation) company dedicated to lithium resource mining and dressing, and lithium battery new material processing.

Based on securing resource supplying, the Company is making further efforts in giving play to its advantages in lithium ore resource reserves and lithium salt technical processing by investing RMB 1 billion in building a lithium salt project owning 35000 tons of capacity. As a result, its lithium salt capacity will achieve 60000 tons.

Two M&As helped to accelerate business transformation and upgrading, and the Company’s performance is significantly improved after consolidation. Operating income in 2018, 2019 and 2020 were respectively RMB 870 million, RMB 1170 million and RMB 1280 million, YOY increasing by 60%, 34% and 10%; net profit attributable to parent company were respectively RMB 110 million, RMB 140 million and RMB 170 million, YOY increasing by 102%, 26% and 24%. Since 2021, the Company has been making swift progress in performance, and operating income and net profit attributable to parent company were respectively RMB 2394 million and RMB 558 million, YOY increasing by 87.67% and 220.33%.

The first two M&As have made the Company the most improved manufacturer in cesium industry chain and a leading company in cesium rubidium salt refinement chemical field worldwide. The Company is also steadily improving its profitability. After the third M&A, lithium salt has become a new profit growth point. Relying on firm exploration business basis, Sino Mine Resource Group has not only gone to a higher level in income but also has shaped a “troika” business structure, i.e. mineral exploration, cesium rubidium salt (including cesium formate leasing business) and lithium salt (including lithium fluoride).

(1) Cesium rubidium sector --- demonstrating cash cow and supporting profit strategic position

As the Company is transforming its principal business from prospecting to rare metal mining and dressing, rare earth business is gradually developing into the Company’s core business. In 2018, 2019 and 2020, among the Company’s operating income, rare metal business accounted for 24%, 43% and 55%. Rare metal sector is supporting the Company’s profit. Gross profit in 2020 reached as high as RMB 398 million, accounting for 74% of total, far more excellent than other businesses.

In 2020, in terms of operating income, cesium rubidium salt, lithium salt, cesium formate, International trade, solid mineral exploration and International engineering respectively accounted for 24.33%, 14.96%, 15.56%, 23.97%, 16.49% and 4.26% of total income. In terms of gross profit, the above-mentioned business sector respectively accounted for 39.74%, 13.23%, 21.25%, 13.90%, 8.72% and 2.40% of total gross profit. From the perspective of gross profit, cesium rubidium salt business is the most important business so far, accounting for nearly 40%. If cesium formate is also considered, cesium rubidium chemical products accounted for over 60% of total gross profit.

Cesium rubidium business is the principal one that brings income and profit to the Company. As a leading company globally, hopefully the Company will continue to present growth in cesium rubidium business, which helps to demonstrate its cash cow and supporting profit strategic position.

(2) Lithium salt sector --- breakthrough has been made in upstream lithium resource, and transforming and improving to an integrated company dedicated to lithium battery new materials

Leading position in lithium fluoride will be further consolidated after technical transformation. As lithium fluoride manufacturing technologies are difficult and lithium fluoride is of corrosive micro explosion nature, the increase in lithium fluoride market supply is limited. After Sino Mine Resource Group acquired Dongpeng New Materials and became a leading company in lithium fluoride nationwide, Sino Mine Resource Group accomplished technical transformation last year, which helps to reach an annual smelting capacity of 6000 tons, making the Company Top 1 in industry; Sino Mine Resource Group also succeeded in accumulating a lot of quality lithium battery and NEV customers. By supplying MORITA Chemical, the Company was able to enter supply chain for Tesla. The Company supplies lithium fluoride products to NEWTAI Material, JIUJIUJIU, and Shanshan and other Lithium Hexafluorophosphate and electrolyte companies. Lithium fluoride has rather high gross profit margin, so it makes huge contributions to profit of lithium sector. In 2021, lithium salt contributed 27% of profit, mainly coming from lithium fluoride.

Newly increased lithium capacity making further contributions to the strengths of new energy racetrack. The Company accomplished battery-grade lithium hydroxide/lithium carbonate production line with annual capacity of 25000 tons in 2021, and the capacity has been put into operation. This is a huge breakthrough for the Company from “0” to “1” in lithium hydroxide and lithium carbonate business; the Company’s acquiring Bikita mine at the beginning of the year is a big breakthrough in lithium ore deployments. After this breakthrough and after guaranteeing resource end, the Company further 35000 tons of constructed high-purity lithium salt capacity to practice the strategic goal of improving its industry position and market competitiveness in lithium battery new raw material field. In the meantime, the new capacity also indicated that the Company is developing from pure lithium product processing company to lithium resource mining and dressing processing company.

(3) Prospecting sector --- the foundation of the Company, and making profit steadily

The Company’s prospecting business income in 2018, 2019 and 2022 were respectively RMB 577 million, RMB 455 million and RMB 570 million, and gross profit were respectively RMB 154 million, RMB 133 million and RMB 135 million. Overall speaking, prospecting business income and profit are relatively stable.

More than that, prospecting industry enjoys support of relevant policies, so it has a bright future. Rigid demands and imbalance between supply and demand of mineral resources especially strategic mineral resources will exist for a very long time. Strategic Mineral Prospecting Action (2021-2035), and The 14th Five-Year Plan (The 14th Five-Year Plan For The National Economic And Social Development Of The People"s Republic Of China And The Outline of Long-term Goals For 2035) implemented by our Natural Resources Ministry have both put forth that we should enhance intensive exploration of mineral resources for strategic minerals in short supply. The Documents provide strategic guidance for the development of geological prospecting. Policy trend is conducive to the Company’s stable development in geological prospecting business and mining right development business.

Sino Mine Resource Group, starting from prospecting business, has developed into a leading company and bright star in minor metal (cesium and rubidium) and lithium salt in just three to four years. The most important reason for its success is that the Company strives to grasp resources before it extends its business to another field every time.

(1) Tanco+Bikita, monopolizing cesium garnet resource globally

In addition to the advantages of grasping whole industry chain pattern and quality customer resources, the Company succeeded in monopolizing cesium garnet resource globally, which effectively secures Top 1 position worldwide and absolute power in global market.

The Company owns Tanco mine in Canada, with 117200 tons of unexploited cesium ore resources. The mine boasts the most quality cesium garnet resource in production so far, accounting for 80% of global cesium resources.

The newly acquired Bikita mine also has cesium garnet resource reserves. “Tanco+Bikita” is going to consolidate the Company’s leading position in cesium and rubidium field and secure core lithium resource to support the release of smelting capacity. This enables the Company to give play to its advantages of prospecting and extend its deployments in potential resources.

Sino Mine Resource Group so far boasts an annual cesium and rubidium salt capacity of 1361 tons, with global occupation rate of over 50%. The Company is equipped with significant resource and capacity strengths. As USA ALB (a competitor of Sino Mine Resource Group) might exit the market due to gradual resource depletion, and as self-owned mines are getting more exploited, the Company will rise to a higher level in monopolizing cesium and rubidium market globally.

(2) Diversified lithium resource securing methods convoy the Company into new energy lithium battery camp

The Company’s lithium industry chain extends upstream in an integrated way, and has already integrated a lot of projects such as Tanco, Arcadia, Bikita and Case Lake. Tanco ore has been put into production and going to be further expanded. Tanco project is the critical lithium resource supply for the Company in the short run. The Company’s long-term goal is to rely on exploration and prospecting, mine acquisition, market purchasing, seeking underwriting to supply ore resource so as to satisfy the production demand of lithium salt.

Bikita + Tanco dual resource securing enables fast release of capacity. The Company successively acquired Canada Tanco ore and Zimbabwe Bikita ore, which helps to improve the Company’s lithium resource deployments. Equity lithium resource achieves 906000 tons of LCE. In the future, the Company’s self-sufficiency rate will rise from 16% to 80%, driving the Company to develop from pure lithium processing company to lithium resource mining and dressing processing company.

Diversified Lithium resource securing methods. In addition to obtaining quality mine resources by M&A, the Company also strives to secure resource supply through various approaches such as underwriting and exclusive agency.

The Company became a shareholder of Australia Prospect Resources Ltd. ( PSC in short) to obtain Phase One underwriting right of Zimbabwe Arcadia ore. This enables the Company to have the underwriting right of Arcadia’s 280000 tons of Spodumene concentrate and 784000 tons of lithium permeable feldspar concentrate. It is likely to be implemented in 2024.

The Company became a shareholder of PWM (about 5.72%) to participate in Case Lake, Paterson Lake and Gullwing-Tot Lake greenland projects. The Company obtained the underwriting right of all lithium, cesium and tantalum products of Case Lake project, which is building up upstream resource supplies for long-term smelting capacity expansion.

In addition, the Company ever secured its lithium resource as the exclusive agency of Bikita Petalite products. The Company sold 20300 tons of Petalite in 2020. It acquired Bikita mine at the beginning of the year, which further consolidates resource self-sufficiency.

To make a conclusion, Sino Mine Resource Group has given us a lot of precious successful experiences in its successful transformation and industry chain expansion. Firstly, the Company gets a deep understanding of mine resource; Sino Mine Resource Group relies on its experience of years of solid mine exploration and deep understanding of all aspects of mine resources to set foot in cesium rubidium and lithium salt field. Secondly, the Company effectively expands to upstream and downstream industry chain based on the antenna of current businesses; the Company acquired Bikita mine in the teeth of the storm decisively and it did not make the decision without any basis. The Company is a leading company in lithium fluoride industry and boasts a quality customer base. Eventually, making sufficient preparation; the Company decided to further expand capacity after it firmly secured resource supply.

Based on the above principles, the Company gave play to the advantages of “being the first company going global”, and made a bold participation in global resource allocation. After controlling global quality cesium rubidium resources and obtaining lithium resources, the Company earnestly expanded to lithium resource exploring, lithium salt and cesium rubidium salt deep processing and manufacturing. Therefore, industry structure was optimized, and the Company has developed from a pure ore prospecting company to a comprehensive mining company integrating mine prospecting and light and rare metal mineral exploration and smelting.