According to the Zhitong Finance App, China Graphite (02237) issued an announcement. According to the “Business” section of the prospectus, the company's target beneficiation capacity for building a new beneficiation plant is estimated to be about 50,000 tons of flake graphite concentrate per year, and the target processing capacity for building a new processing plant is about 6,000 tons of spherical graphite per year. In order to optimize the company's strategic layout and enhance the company's competitiveness in the graphite industry, the company has acquired this woodland to increase graphite production, and build new beneficiation plants, new processing plants and tailings ponds as described in the prospectus.

The company formulated a new graphite mining plan to increase the licensed graphite mining volume at the company's Beishan mine to more than 500,000 tons per year. Therefore, the company plans to use part of the woodland to mine graphite and store waste stone expected to increase due to increased mining activities. With the increase in graphite mining capacity described above, the Beishan mine can fully supply unprocessed graphite for production to the company's existing beneficiation plants and the new beneficiation plants described in the prospectus, bringing production cost advantages to the Group in the long run.

The remaining portion of the woodland will be used as a land reserve to ensure that the land area near the Beishan mine is sufficient for the company to build, develop and expand in the future.

In view of recent and anticipated competition in the downstream electric vehicle market in China and the graphite industry as a whole, the company decided to change the Group's latest strategic focus from “production orientation” to “production cost optimization.” Increasing the maximum amount of graphite mined is the focus of the company's business, enabling the Group to benefit from cost advantages.

On February 21, 2024, Yixiang New Energy, an indirect wholly-owned subsidiary of the company, obtained the official consent of the State Forestry and Grassland Administration to use the woodland. The cost of acquiring the right to use the woodland in Heilongjiang, China was RMB 86.922,100 (woodland acquisition). The company will apply to change the use of the woodland from woodland to industrial land.

According to reports, the woodland is located on the border of the lower mountains and Sanjiang Plain in the south of the Daxinganling Mountains in Luobei County, Hegang City, Heilongjiang Province, China.

The company is mainly engaged in the production and sale of flake graphite concentrate and spherical graphite. Taking into account the latest business news of the company described above, the directors are actively seeking opportunities and suitable plots to build new beneficiation plants and processing plants to increase the production and sales of graphite products and to build tailings ponds nearby to reduce transportation costs for disposal of waste stone and tailings. In view of the company's application of the latest strategy to minimize production costs in the long term, the company is also actively seeking opportunities to expand graphite mining to reduce the company's production costs, maintain abundant graphite resources, and fully supply unprocessed graphite to the company's existing and new beneficiation plants for production, thereby creating upstream and downstream synergies, reducing costs while ensuring a continuous and stable supply of high-quality graphite. Through this, the company can further consolidate its competitive advantage and expand its business, expand its revenue base while reducing costs and improving profitability, and bring better returns to its shareholders. The woodland acquisition provides the company with a unique business opportunity to implement a new strategic focus and direction, expand its base and network, and enhance its brand's influence and business competitiveness in the Chinese graphite market under fierce competition among recent and upcoming graphite industry participants.