On the evening of October 12, domestic lithium salt production giant Sichuan Yahua Industrial Group Co., Ltd. issued an announcement stating that the company has signed a "termination agreement" with Canadian Super Lithium Company, and will also sign an agreement to withdraw from

On the evening of October 12, domestic lithium salt production giant Sichuan Yahua Industrial Group Co., Ltd. (002497.SZ, hereinafter referred to as "Yahua Group"), issued an announcement stating that the company has signed a "termination agreement" with Canadian Ultra Lithium Inc., and will also sign an agreement to withdraw from the project company's investment.

Yahua Group said that based on its judgment on the current international environment, it is expected that mine development may be greatly affected, resulting in a longer period of mine development. The company plans to terminate its investment in Canada's super lithium project. However, the company currently has sufficient lithium resources for upstream, and the further expansion of lithium salt production capacity in the future may not be affected by this.

On October 14, when The Paper reporter further understood the reasons for the termination of investment in Yahua Group, he denied the considerations in project development costs, but emphasized the impact of the current international environment.

As of the closing of A-shares on October 14, Yahua Group's shares closed at 26.87 yuan per share, up 2.91% from the previous trading day, and its current market value is 31 billion yuan.

It is understood that Yahua Group is an enterprise with lithium salt production as its main business. Its predecessor was Ya'an Chemical Factory in Sichuan Province. It was reorganized and established Yahua Industrial Co., Ltd. in 2001. It was renamed Yahua Group in 2009 and listed on the Shenzhen Stock Exchange in 2010.

Currently, the company's lithium business covers the entire chain of lithium hydroxide preparation, battery-grade lithium carbonate purification, production of lithium dihydrogen phosphate, the precursor of the battery positive electrode material, and product sales. Customers include leading domestic and foreign companies in the lithium battery industry such as Tesla , LG New Energy, Panasonic , Zhenhua Technology , Rongbai Technology, Dangsheng Technology and other leading domestic and foreign companies in the lithium battery industry. According to the company, by 2025, the company's comprehensive production capacity of lithium salt products will exceed 100,000 tons.

On April 17, 2022, Yahua International, a wholly-owned subsidiary of Yahua Group, signed a "Share Subscription Agreement" with Canada Chaoli Company, intending to invest 5 million Canadian dollars to subscribe 21.2766 million units of Chaoli Company at a price of CAD 0.235 Canadian dollars per share, accounting for 13.23% of Chaoli Company's total share capital as of the date of this announcement. At the same time, Yahua International acquired 60% of the equity of Beijia Lithium, a wholly-owned subsidiary of Chaolith Company, with cash investment, and controlled its Lake Fugen Hard Rock Spodumene-type lithium mine project and Lake Georgia Hard Rock Spodumene-type lithium mine project.

. The company previously stated in its first half of 2022 report that the transaction investing in Canadian Super Lithium is under review by the Canadian ISED department. The company has completed the acquisition of 60% of the equity of Beiga Lithium, and Beiga Lithium is carrying out exploration work.

It is understood that Canadian Super Lithium is an exploration and development company (TSXV: ULT) listed on the GEM of the Toronto Stock Exchange, Canada. It was founded in 2004 and focuses on the exploration and development of lithium, gold and copper resources. Super Lithium owns a brine lithium mine in Argentina , hard rock spodumene in the Lake Georgia and Lake Fugen areas in northern Ontario, Canada, , a brine lithium mine in Nedahua, the United States, and copper, gold mining rights and prospecting rights in many areas in Argentina.

According to the previous announcement of Yahua Group, the Lake Fugen Hard Rock Spodumene-type lithium mine project and the Lake Georgia Hard Rock Spodumene-type lithium mine project are located in Ontario, Canada. The total area of ​​ mining rights is 26.72 square kilometers. The mining area has good infrastructure support, convenient transportation, and complete water and electricity infrastructure. There are highways nearby to the port, about 145 kilometers.

Among them, the outcrop area of ​​the Fugen Lake hard rock spodumene type lithium mine project is based on the ground surface outcrop area, with an estimated resource volume of 6.4 million tons, and the average grade of lithium oxide is 2.2%. The preliminary investigation estimates that the lithium oxide equivalent is about 140,000 tons. The outcrop area of ​​the Georgia Lake project is estimated to be 5.4 million tons of resources, with an average grade of lithium oxide of 1.2%. Initial investigations estimate that the lithium oxide equivalent is about 65,000 tons.

According to the preliminary investigation results, the first phase of the project will design and build a lithium concentrate project mining plant with an annual lithium oxide grade of 6%. The continuous operation time will not be less than 10 years. According to further detailed surveys in the later stage, the second phase of the construction will expand the production capacity to 400,000 tons.

According to public information, as of October 31, 2021 (audited), Chaolith Company had a total assets of approximately CAD 3.17 million, liabilities of approximately CAD 140,000, operating income of 0, and net profit of -200,000. As of July 31, 2022 (unaudited), Chaoli Group's total assets were CAD 16.44 million, total liabilities were CAD 503,000, and net profit was CAD -260,000.

upstream lithium resources are abundant, and the expansion of lithium salt production capacity is not affected for the time being

Yahua Group stated that the termination of foreign investment is the result of the company's careful consideration and consensus negotiation with the other party. The company does not need to bear compensation and other responsibilities for the termination of related matters. The development of the lithium mine project of Chaoli Company has not yet entered the substantial mining stage and has not generated any profits. The termination of investment will not have a significant impact on the company's normal production and operation and future development. The statement

has been confirmed by the latest press release from the Chaoli Company website. The company's lithium mines in Lake Fugen and Lake Georgia in northwest Ontario, Canada are in drilling stages, according to a press release on October 11. So far, the company has completed 31 NQ and HQ size drill holes, drilling more than 3,500 meters of rock, and samples will be tested next month.

In addition, Yahua Group stated that the company's current lithium resource supply can fully meet the needs of lithium salt production, and will also deploy upstream lithium resources through multiple channels and all aspects in the future to provide sufficient resource guarantee for the company's lithium salt production capacity expansion.

It is understood that after the termination of this project, Yahua Group still laid out multiple overseas lithium resource projects such as Australia through underwriting or investment.

Among them, in December 2021, its wholly-owned subsidiary Yahua International subscribed 80 million shares of Australian EVR Company at a price of AUD 0.045 per share, accounting for 9.5% of the total share capital of EVR Company. EVRgongsi owns lithium tin tantalum project in the Shawhe Australia, Lithium tin tantalum project in Austria, Vinbeni project in Austria and lithium mine in the East Alps, which will be jointly developed by both parties.

In February 2022, its wholly-owned subsidiary Yahua International took a stake in Australia Core Company and signed a lithium concentrate underwriting agreement. Core has begun mining construction and is expected to supply no less than 75,000 tons of lithium concentrate to the company each year in the fourth quarter of 2022.

In February 2022, its wholly-owned subsidiary Yahua International subscribed 3.7 million shares of Australian ABY Company at AUD 0.75 per share, accounting for 3.4% of ABY’s pre-IPO equity. The two parties signed a "Overview and Sales Agreement" for lithium concentrate. ABY Company owns mineral resources in African countries such as Sudan and Ethiopia . The core assets are mainly Ethiopia's Kenticha Lithium Mine (holding 51% equity). It is expected that the second quarter of 2023 will supply no less than 120,000 tons of lithium concentrate to Yahua Group every year.

In July 2022, its subsidiary Xingsheng Lithium acquired 70.59% of the shares of Pude Technology for US$92.9047 million, and indirectly holds 60% of the shares of Pude Technology's holding subsidiary KMC. KMC owns 100% of the rights of pegmatite polymetallic ores such as lithium tin, tantalum, niobium, beryllium, beryllium, beryllium, and beryllium in the Kamativi mining area west of Zimbabwe . Among them, the No. 4 vein has the largest scale, with an average grade of lithium oxide of 1.25%, equivalent to the lithium oxide resource of about 227,800 tons.

In addition, Yahua International has also participated in the equity of Australian EFE Company and will continue to jointly develop lithium mineral resources through joint ventures. Previously, on September 27, Yahua Group announced that EFE has obtained the rights to Pudeshan lithium tantalum ore. Yahua International will subscribe to EFE's private placement shares to increase its shareholding ratio in EFE, with a total subscription amount of 2 million Australian dollars. After the subscription is completed, Yahua International holds 114 million shares of EFE Company, with a shareholding ratio of approximately 10% (excluding option ).

In the previous semi-annual report, Yahua Group stated that with the annual production line of Yaan Lithium Phase I, the company's lithium carbonate (lithium hydroxide) of 20,000 tons per year, the company's comprehensive lithium salt design capacity has reached 43,000 tons. In 2021, the company officially launched the construction of the second phase of Ya'an Lithium Industry's 30,000-ton battery-grade lithium hydroxide production line. The production line is expected to be completed and put into production by the end of this year; the third phase plan is under formulation.

In the first half of 2022, affected by the increase in sales prices and sales volume of lithium salt products, Yahua Group's operating income was 6.004 billion yuan, an increase of 182.64% year-on-year. Among them, the lithium business revenue was 4.597 billion yuan, accounting for 76.56% of its main business revenue, and the business revenue increased by 449.79% year-on-year.The net profit attributable to shareholders of listed companies was 2.262 billion yuan, an increase of 585.30% over the same period last year, of which the net profit of lithium business was 2.099 billion yuan, accounting for 92.79%.

According to Yahua Group, the company will achieve a net profit of 3.462-3.662 billion yuan in the first three quarters of 2022, a year-on-year increase of 447.53%-479.16%.