Ganfeng Lithium Group Co., Ltd. - Capital/Financing Update 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

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(A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1772)

(I) Proposed Issuance of H Shares under Specific Mandate and Connected Transaction;

(II) Proposed Grant of Specific Mandate; (III) Proposed Issuance of A Share Convertible Bonds; And (IV) Possible Subscription for A Share Convertible Bonds by Connected Persons

On 29 April 2019, the Company held the 34th meeting of the fourth session of the Board in Jiangxi, at which resolutions in relation to (among others) Proposed Issuance of H Shares under Specific Mandate and connected transaction, Proposed Grant of Specific Mandate, Proposed Issuance of A Share Convertible Bonds and Possible Subscription for A Share Convertible Bonds by connected persons were considered and approved.

Proposed Issuance of H Shares under Specific Mandate and connected transaction, Proposed Grant of Specific Mandate, Proposed Issuance of A Share Convertible Bonds and Possible Subscription for A Share Convertible Bonds by connected persons are subject to the Shareholders’ approvals at the AGM or the extraordinary general meeting and the Class Meetings of the Company and the approvals from the CSRC and other relevant authorities. A circular containing, among others, the details of the Proposed Issuance of H Shares under the Specific Mandate and connected transaction, the Proposed Grant of Specific Mandate, the Proposed Issuance of A Share Convertible Bonds and the Possible Subscription for A Share Convertible Bonds by connected persons and other matters will be despatched to Shareholders in due course.

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The Company announces that the Board has approved resolutions in relation to Proposed Issuance of H Shares under Specific Mandate and connected transaction, Proposed Grant of Specific Mandate, Proposed Issuance of A Share Convertible Bonds and Possible Subscription for A Share Convertible Bonds by connected persons. Pursuant to the provisions of the Articles of Association of the Company, resolutions in relation to Proposed Issuance of H Shares under Specific Mandate and connected transaction, Proposed Grant of Specific Mandate, Proposed Issuance of A Share Convertible Bonds and Possible Subscription for A Share Convertible Bonds by connected persons are subject to Shareholders’ approvals at the AGM or the extraordinary general meeting and the Class Meetings.

I. PROPOSED ISSUANCE OF H SHARES UNDER SPECIFIC MANDATE AND CONNECTED TRANSACTION

Based on actual capital requirements of the Company and with the aim to support future business development, having taken full account of the regulation and approval, investors’ preference and other factors, holds the view that additional issuance of H Shares of the Company can satisfy demands of both domestic and overseas investors and can ensure that the Company would continuously comply with requirements about public float as set out in the Hong Kong Listing Rules. In light of the above, the Board has approved the resolution in relation to Proposed Issuance of H Shares under Specific Mandate and connected transaction.

Basic information of the Issuance of H Shares under Specific Mandate and connected transaction

1. Class and nominal value of the Shares to be issued

The Issuance of H Shares will be made to overseas investors. All of the H Shares are the ordinary shares with a nominal value of RMB1.00 each and will be listed on the Main Board of the Stock Exchange. Unless otherwise stated in the applicable PRC laws and rules and the Articles of Association of the Company, all the new H Shares to be issued will rank pari passu with all other H Shares as at the date of the Issuance of H Shares in all respects upon issuance and being paid up.

2. Method and date of issue

All of the H Shares will be issued to target subscribers by way of non-public issuance. The Issuance of H Shares is conditional upon the approval by the CSRC and the Stock Exchange for the H Shares to be listed and will be completed in due course within the validity period of the Issuance of H Shares and during appropriate market window.

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3. Target subscribers

The Issuance of H Shares is targeted at the entities invested, controlled or designated by LI Liangbin, the single largest Shareholder and the Chairman of the Company in compliance with relevant laws and regulations, the entities invested, controlled or designated by WANG Xiaoshen, the Vice Chairman of the Company in compliance with relevant laws and regulations, other overseas natural persons, institutional investors who are independent of the Company and not connected persons of the Company, and other eligible investors. The Proposed Subscribers propose to subscribe for H Shares, directly or indirectly, by ways that are in compliance with relevant laws and regulations.

4. Number of shares to be issued

The number of H Shares to be issued will not exceed 50,000,000 H Shares, including up to 12,500,000 H Shares to the entities invested, controlled or designated by LI Liangbin, the single largest Shareholder and the Chairman of the Company in compliance with relevant laws and regulations, up to 12,500,000 H Shares to the entities invested, controlled or designated by WANG Xiaoshen, the Vice Chairman of the Company in compliance with relevant laws and regulations, and remaining 25,000,000 H Shares to other overseas natural persons, institutional investors who are independent of the Company and not connected persons of the Company, and other eligible investors for subscription.

The Issuance of H Shares will be implemented upon the approvals of the CSRC and the Stock Exchange. Actual number of H Shares to be issued shall be determined by the Company and the lead underwriter according to market conditions and the Hong Kong Listing Rules.

Prior to the Issuance of H Shares, the Company has a total of 1,315,082,519 shares in issue, including a total of 1,114,896,719 A Shares, representing 84.78% of the total share capital of the Company, and a total of 200,185,800 H Shares, representing 15.22% of the total share capital of the Company. The 50,000,000 Subscription Shares are new H Shares to be allotted and issued by the Company. The Subscription Shares represent 24.98% and 3.8% of the total H Shares in issue and the total Shares in issue as at the date of this announcement, respectively, and 19.98% and 3.66% of the enlarged total H Shares in issue and total Shares in issue after the issuance of Subscription Shares, respectively.

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5. Method of pricing

The issue price of the Subscription Shares shall be determined according to the international practice, PRC regulation requirements and international capital market conditions and the market price of the H Shares at the time of the issue of the new H Shares and by reference to the valuation of the companies of the same type as the Company in the international capital market, after fully taking into account of the interests of the existing Shareholders of the Company, preference of investors and risks in relation to the Issuance of the H Shares, and shall not be discounted for more than 20% as compared with the highest of the following prices:

(I) the closing price of H Shares on the day when the relevant H Share placement agreement is entered into; and
(II) average closing price of H Shares within the five trading days immediately before the earliest of the following dates (inclusive):
(a) the date when the H Share placement agreement is announced;
(b) the date when the H Share placement agreement is entered into; and
(c) the date when H Share placement or subscription price is determined.

The subscription of all Shares under the Issuance of H Shares to be issued will be paid by cash.

6. Use of proceeds

The proceeds from the Issuance of the H Shares, after deduction of the expenses relating to the Issuance of H Shares, will be used for investing in development and construction of mineral resources, and replenishing the working capital of the Company.

7. Related party relationship, connected relationship, related party transactions, connected transactions and shareholders to abstain from voting

To the best of the Company’s knowledge and the Proposed Subscribers’ confirmation, targeted subscribers of the Issuance of H Shares include the entities invested, controlled or designated by LI Liangbin, the single largest Shareholder and the Chairman of the Company in compliance with relevant laws and regulations, the entities invested, controlled or designated by WANG Xiaoshen, the Vice Chairman of the Company in compliance with

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relevant laws and regulations, other overseas natural persons, institutional investors who are independent of the Company and not connected persons of the Company, and other eligible investors. As defined in the Hong Kong Listing Rules, the Proposed Subscribers constitute connected persons under the Hong Kong Listing Rules, and related parties under the Shenzhen Listing Rules. Accordingly, the transactions constitute connected transactions under the Hong Kong Listing Rules and related party transactions under the Shenzhen Listing Rules.

All independent Directors submitted their prior confirmation on the connected transactions and the related party transactions relating to the Issuance of H Shares prior to submission of the resolution to the Board. Connected Directors and related party Directors have abstained from voting when the Board of considers the relevant resolution.

LI Liangbin and WANG Xiaoshen are deemed to be materially interested in the Issuance of H Shares, and have abstained from voting on Board resolutions of Proposed Issuance of H Shares under Specific Mandate and connected transaction and Proposed Grant of Specific Mandate. Save for the Directors disclosed above, none of the other Directors are or are deemed to be materially interested in the above transactions. In addition, none of the other Directors shall abstain from voting on the resolution in relation to the Issuance of H Shares and the grant of Specific Mandate.

Our independent Directors have expressed their independent opinions and are of the view that the resolution procedure has complied with the provisions of relevant laws, regulations and the Articles of Association; connected transactions and related party transactions relating to the Issuance of H Shares are in conformity with the principles of justice, fairness and openness, and are in line with the interests of the Company and all Shareholders, without prejudices to the interests of the Company and other Shareholders, in particular, minority Shareholders. Pursuant to the provisions of the Mandatory Provisions of Articles of Association of Companies to be Listed Overseas (《到境外上市公司章程必備條款》) and the Articles of Association, the Issuance of H Shares is subject to consideration and approval at the general meeting and Class Meetings. LI Liangbin and WANG Xiaoshen, the connected persons/related parties who are materially interested in such connected transactions and related party transactions shall abstain from voting on resolutions in relation to such transactions at the general meeting and Class Meetings when such resolutions are being considered at the general meeting and Class Meetings.

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8. Lock-up period

The Proposed Subscribers shall undertake that they will not transfer the H shares of the Company they subscribed for under the Issuance of H Shares for a period of six months from the date of listing of such H shares on the Stock Exchange. A longer lock-up period shall apply if so required by the relevant share placing or subscription agreement or the applicable laws and regulations or regulatory authorities in or out of China.

9. The validity period of the resolution in relation to the Issuance of H Shares

The resolution in relation to the Issuance of the H Shares will be valid for 12 months from the date on which the resolution is considered and approved at the Board meeting. Where the Board and/or its authorised persons have decided on the Issuance of H Shares within the validity period of the resolution of the general meeting and Class Meetings in relation to the Issuance of H Shares and the Company has obtained approval and permit from and filed or registered (if applicable) with the regulatory authority for the Issuance of H Shares within the validity period of the resolution of the general meeting and Class Meetings in relation to the Issuance of H Shares, the Company may complete the Issuance of H Shares within the validity period confirmed by such approval, permit, filing or registration. The Board may propose to the general meeting and Class Meetings for considering and approving (if thought fit) the extension of the validity period of the resolution in relation to the Issuance of H Shares.

10. Application for listing

The Company will apply to the Stock Exchange for the listing of, and permission to deal in, the new H shares to be issued under the Issuance of H Shares on the Stock Exchange.

Effect on the H Shareholding Structure of the Company upon the Issuance of H Shares

Before the Issuance of H Shares, the Company has in issue a total of 1,315,082,519 Shares, including 1,114,896,719 A Shares and 200,185,800 H Shares.

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Set out below is the H shareholding structure of the Company: (i) before the Issuance of H shares; and (ii) immediately after the completion of the Issuance of H Shares (assuming the number of Shares under the Issuance of H Shares are 50,000,000 Shares; assuming that the entities invested, controlled or designated by LI Liangbin in compliance with relevant laws and regulations will subscribe for 12,500,000 H Shares and the entities invested, controlled or designated by WANG Xiaoshen in compliance with relevant laws and regulations will subscribe for 12,500,000 H Shares; assuming that there are no other changes in the issued share capital of the Company except for the Subscription Shares to be allotted and issued under the Issuance of H Shares):

Name of Shareholder LI Liangbin Note (1) WANG Xiaoshen Note (2) Public holders of H Shares Total H Shares	Before the Issuance of H Shares Number of H Shares Approximate percentage of the total Shares of all classes in issue Approximate percentage of the total H Shares in issue – – – – – – 200,185,800 15.22% 100% 200,185,800 15.22% 100%	Immediately after the completion of the Issuance of H Shares Number of H Shares Approximate percentage of the total Shares of all classes in issue Approximate percentage of the total H Shares in issue 12,500,000 0.92% 5.00% 12,500,000 0.92% 5.00% 225,185,800 16.50% 90.00% 250,185,800 18.33% 100%	Immediately after the completion of the Issuance of H Shares Number of H Shares Approximate percentage of the total Shares of all classes in issue Approximate percentage of the total H Shares in issue 12,500,000 0.92% 5.00% 12,500,000 0.92% 5.00% 225,185,800 16.50% 90.00% 250,185,800 18.33% 100%
			100%

Note:

(1) Mr. LI Liangbin is a substantial shareholder of the Company and a Director, and therefore is a connected person of the Company under Chapter 14A of the Hong Kong Listing Rules.
(2) Mr. WANG Xiaoshen is a Director, and therefore is a connected person under Chapter 14A of the Hong Kong Listing Rules.

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II. PROPOSED GRANT OF SPECIFIC MANDATE

Up to 50,000,000 H Shares will be issued under the Specific Mandate proposed to be sought from the Independent Shareholders at the AGM or the extraordinary general meeting and the Class Meetings. To ensure smooth implementation of the Issuance of H shares, it will be proposed at the AGM or the extraordinary general meeting and Class Meetings to authorize the Board of the Company, and agree that the Board will further authorize Ms. OUYANG Ming, the secretary to the Board of the Company, to jointly or separately exercise the full power to handle matters relating to the Issuance of H Shares under the framework and principles as considered and approved at the AGM or extraordinary general meeting as well as the Class Meetings and within the validity period of the resolution in respect of the Issuance of H Shares, including but not limited to: make changes or amendments to the subscription agreement as it/she may in its/her absolute discretion deem fit, to implement and take all steps and to do any and all acts and things as may be necessary or desirable to give effect to the subscription agreement and/or to complete the Issuance of H Shares and to sign and execute any other documents or to do any other matters incidental thereto and/or as contemplated thereunder. The Specific Mandate can be exercised once or more than once. Under the the Resolution on Proposed Gant of Specific Mandate, it is proposed to authorise the Board to approve, sign and execute or cause to sign and execute any necessary documents, covenants and matters as it deems relevant to the issuance of new H Shares; increase the actual capital share through the issuance of new H Shares, in order to increase the Company’s registered capital, file the registered capital that has been increased with the relevant authorities, and make amendments as it deems appropriate to the Company’s Articles of Association, to reflect the increase in the Company’s registered capital; submit the applications, reports and other documentation in relation to the Issuance of H Shares with the domestic regulators or institutions, and complete review, registration, filing, approval, agreement and other procedures; and generally and unconditionally approve, ratify and confirm all acts under the Specific Mandate or in line with the Specific Mandate or in relation to the Specific Mandate, and all acts adopted or to be adopted by the Company in accordance with the matter of the Issuance of H Shares.

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III. PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS

In recent years, the Company has maintained its fast pace of business development with abundant business reserves, resulting in the increase in the financing needs of the Company. Therefore, the Board proposes to issue A Share Convertible Bonds up to RMB2,150,000,000 (inclusive). Upon the completion of the Proposed Issuance of A Share Convertible Bonds (including Possible Subscription for A Share Convertible Bonds by connected persons), the Company will further consolidate the capital foundation for the sustainable development of its various business lines, which is beneficial to the development of the Company’s core competitiveness and the realisation of strategic objective.

Pursuant to the relevant requirements under the Company Law, the Securities Law, the Administrative Measures for the Issuance of Securities by Listed Companies (《上市公司証券發行管理辦法》) and other laws, regulations and normative documents, upon the Company’s review on the qualifications and conditions of a company applying for issuance of A share convertible bonds, the Company believes that it has satisfied all the provisions and requirements of the relevant laws, regulations and normative documents in relation to the public issuance of A share convertible bonds by listed companies, that it is not a subject of bad faith and that it possesses the qualifications and conditions for public issuance of A share convertible bonds.

Details of the A Share Convertible Bond Issuance Plan are as follows:

1. Type of securities to be issued

The type of the securities to be issued is convertible bonds which can be converted into A Shares. The A Share Convertible Bonds and the A Shares to be converted will be listed on the Shenzhen Stock Exchange.

2. Size of issuance

The total amount of the A Share Convertible Bonds proposed to be issued will not exceed RMB2.15 billion (inclusive). The actual size of the issuance shall be determined by the Board and its authorised persons within the above range, subject to the authorisation by the Shareholders at the AGM or the extraordinary general meeting and the Class Meetings.

3. Term

The term of the A Share Convertible Bonds will be six years from the date of the issuance.

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4. Par value and issue price

The A Share Convertible Bonds will be issued at par with a nominal value of RMB100.00 each.

5. Interest rate

Shareholders at the AGM or the extraordinary general meeting and the Class Meetings shall authorise the Board to determine the method of determining the nominal interest rate as well as the final interest rate for each interest accrual year of A Share Convertible Bonds upon negotiation with the sponsor (the lead underwriter) in accordance with national policies, market conditions and the actual conditions of the Company.

6. Method and timing of interest payment and repayment of the principal

The interest of the A Share Convertible Bonds will be paid annually, and the principal and the interest for the final year will be paid upon maturity.

(1) Calculation of Annual Interest

The formula for calculating the Annual Interest is: I = B x i

I: denotes the Annual Interest;
B: denotes the aggregate nominal value of the A Share Convertible Bonds held by an A Share Convertible Bond Holder as at the record date for interest payment in an interest accrual year (hereinafter referred to as “current year” or “each year”);
i: denotes the nominal interest rate of the A Share Convertible Bonds of current year.

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(2) Method of interest payment

a. The interest of the A Share Convertible Bonds will be paid annually, accruing from the date of the issuance of the A Share Convertible Bonds.
b. Interest payment date: The interest is payable annually on each anniversary of the date of the issuance of the A Share Convertible Bonds. Where such a date falls on a statutory holiday or rest day, the interest payment date shall be postponed to the next working day, with no additional interest accrued during the period of postponement. The period between any two consecutive interest payment dates will be an interest accrual year.
c. Record date for interest payment: The record date for interest payment in each year will be the trading day immediately preceding the interest payment date. The Company will pay the interest accrued for current year within five trading days from the interest payment date. Where an A Share Convertible Bond Holder converts his/her A Share Convertible Bonds into A shares on or before the record date for interest payment, that A Share Convertible Bond Holder shall not be entitled to any interest for that year and any subsequent interest accrual year.
d. Tax payable on the interest income of an A Share Convertible Bonds Holder shall be borne by such holder him/herself.

7. Conversion period

The conversion period of the A Share Convertible Bonds shall commence on the first trading day immediately following the expiry of the six-month period after the date of the issuance of the A Share Convertible Bonds, and end on the maturity date of the A Share Convertible Bonds.

8. Method of determining the number of shares for conversion

Where an A Share Convertible Bonds Holder applies to convert the Convertible Bonds held by him during the conversion period, the formula for calculating number of the Shares to be issued upon conversion: Q = V/ P. Any fractional Share shall be rounded down to the nearest integer. In the aforesaid formula:

V: denotes the aggregate nominal value of the A Share Convertible Bonds in respect of which the A Share Convertible Bonds Holders apply for conversion;

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P: denotes the prevailing conversion price as at the date of application for conversion.

An A Share Convertible Bond Holder can only apply to convert such A Share Convertible Bonds into A Shares in integers. Within five trading days from the conversion of the A Share Convertible Bonds, the Company will pay the A Share Convertible Bond Holder in cash an amount equal to the nominal value of such A Share Convertible Bonds which are insufficient to be converted into one share and the interest accrued for current period on such a balance in accordance with the relevant requirements of the Shenzhen Stock Exchange and such other authorities.

9. Determination and adjustment of the conversion price

(1) Basis for determining the initial conversion price

The initial conversion price of A Share Convertible Bonds shall not be lower than the average trading price of A Shares during the 20 trading days immediately preceding the date of publication of the Offering Document (in the event that during such 20 trading days, the share price has been adjusted due to ex-rights or ex-dividend, the average share price for the trading days before the adjustment shall be accordingly adjusted with reference to the adjusted share price following the ex-rights or ex-dividend) and the average trading price of A Shares on the trading day immediately preceding the date of publication of the Offering Document. The actual initial conversion price shall be determined by the Board upon negotiation with the sponsor (the lead underwriter) in accordance with the market conditions and actual conditions of the Company, subject to the authorisation by the Shareholders at the AGM or the extraordinary general meeting and the Class Meetings.

The average trading price of A Shares for the 20 trading days immediately preceding the date of publication of the Offering Document = the total trading amount of A Shares during such 20 trading days/the total trading volume of A Shares during such 20 trading days；

The average trading price of A Shares for the trading day immediately preceding the date of publication of the Offering Document = the total trading amount of A Shares on such a trading day/the total trading volume of A Shares on such a trading day

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(2) Method of adjustment to the conversion price

The conversion price is subject to adjustments in certain events subsequent to the issuance of the A Share Convertible Bonds such as distribution of share dividends, capitalisation, issuance of new shares or rights issue and distribution of cash dividends (excluding any increase in the share capital as a result of conversion of the A Share Convertible Bonds). The Company will adjust the conversion price based on the following formula (rounded to two decimal places):

Distribution of share dividends or capitalisation: P1=P0/(1+n)；

Issuance of new shares or rights issue:P1=(P0+A×k)/(1+k)；

The above two events occurring concurrently: P1=(P0+A×k)/(1+n+k)；

Distribution of cash dividends: P1=P0-D；

The above three events occurring concurrently: P1=(P0-D+A×k)/ (1+n+k).

In the aforesaid formulae, “P1” denotes the adjusted conversion price; “P0” denotes the conversion price before the adjustment; “n” denotes the rate of distribution of share dividends or capitalisation; “A” denotes the price of issuance of new shares or rights issue; “k” denotes the rate of issuance of new shares or rights issue; and “D” denotes the cash dividend per share.

Upon occurrence of any of the abovementioned changes in A Shares and/or A Shareholders’ interests, the Company will adjust the conversion price in accordance with the above method, and an announcement in relation to the adjustment of the conversion price will be made on the media designated by CSRC for information disclosure of listed companies. Such an announcement will indicate the date of the adjustment to the conversion price, method of the adjustment and suspension period of share conversion (if necessary). Meanwhile, the Company shall disclose the information to the Hong Kong market in accordance with the Hong Kong Listing Rules and the Articles of Association of the Company (if necessary). If the conversion price adjustment date is on or after the date on which an A Share Convertible Bond Holder applies for conversion of his/her A Share Convertible Bonds but before the registration date of the shares to be issued upon conversion, such conversion will be executed based on the adjusted conversion price.

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In the event that the A Share Convertible Bond Holders’ interests or the interests derived from the share conversion of the A Share Convertible Bonds are affected by the change in the Company’s share class, quantity and/or Shareholders’ interests due to any possible share repurchase, consolidation, division or any other circumstances, the Company will adjust the conversion price based on the actual situations and in accordance with the principles of fairness, justice and equality so as to fully protect the interests of the A Share Convertible Bond Holders. The details of the adjustment to the conversion price and its implementation measures shall be determined in accordance with the relevant national laws and regulations and the relevant requirements of the securities regulatory authorities.

10. Terms of downward adjustment to the conversion price

(1) Authorisation and magnitude of adjustment

If, during the term of the A Share Convertible Bonds, the closing prices of A Shares in at least 15 trading days out of any 30 consecutive trading days are lower than 80% of the prevailing conversion price, the Board may propose a downward adjustment to the conversion price to Shareholders at the general meeting and the Class Meetings for their consideration and approval.

The abovementioned proposal is subject to approvals of more than two-thirds of the voting rights of the Shareholders who attend the meeting. Shareholders who hold the A Share Convertible Bonds should abstain from voting at the general meeting. The adjusted conversion price should be no less than the higher of the average trading price of A Shares during the 20 trading days immediately preceding the date of such a general meeting and the average trading price of A Shares on the trading day immediately preceding the date of such a general meeting.

In the event that an adjustment to the conversion price by the Company is made due to ex-rights or ex-dividend during the aforementioned 30 trading days, in respect of the trading days prior to the adjustment to the conversion price, the calculation shall be based on the unadjusted conversion price and the closing price of the A Shares on each such day, while in respect of the trading day on which adjustment to the conversion price is made and the trading days afterwards, the calculation shall be based on the adjusted conversion price and the closing price of the A Shares on each such day.

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(2) Adjustment procedures

If the Company decides to make a downward adjustment to the conversion price, the Company shall publish relevant announcement on media designated by CSRC for information disclosure of listed companies. Such an announcement shall disclose information including the magnitude of the adjustment, the registration date of the shares subject to the downward adjustment to the conversion price, the suspension period of share conversion (if any) and such other information. Meanwhile, the Company shall disclose the information to the Hong Kong market in accordance with the Hong Kong Listing Rules and the Articles of Association (if necessary). Application for conversion of the A Share Convertible Bonds at the adjusted conversion price shall be resumed upon the first trading day after the registration date, i.e. the conversion price adjustment date.

If the conversion price adjustment date is on or after the date of the application for conversion but before the registration date of the shares to be issued upon conversion, such conversion will be executed based on the adjusted conversion price.

11. Terms of redemption

(1) Terms of redemption upon maturity

Within 5 trading days upon maturity of the A Share Convertible Bonds, the Company will redeem all the A Share Convertible Bonds which have not been converted into A Shares by then, at a price determined by the Board upon negotiation with the sponsor (the lead underwriter) with reference to the market conditions, subject to the authorisation by the Shareholders at the general meeting.

(2) Terms of conditional redemption

During the conversion period, in case of one of the following two circumstances, the Company has the right to redeem all or part of the A Share Convertible Bonds which have not been converted into shares based on the par value plus the accrued interest then:

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(1) where the closing prices of A Shares for at least 15 trading days out of any 30 consecutive trading days during the conversion period are no less than 130% (inclusive) of the prevailing conversion price;
(2) where the balance of the outstanding A Share Convertible Bonds under the issuance is lower than RMB30.00 million.

Formula for calculating the then accrued interest is: IA=B×i×t/365

IA: denotes the accrued interest for the current period;
B: denotes the aggregate nominal value of the A Share Convertible Bonds to be deemed that are held by the A Share Convertible Bond Holders under the issuance;
i: denotes the nominal interest rate of the A Share Convertible Bonds for current year;
t: denotes the actual number of calendar days from the last interest payment date up to the redemption date of that interest accrual year (including the last interest payment date).

Redemption period of the A Share Convertible Bonds under the issuance is consistent with the conversion period, i.e., to commence from the first trading day immediately following the expiry of the six-month period after the date of the issuance, and to end on the maturity date of the A Share Convertible Bonds

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12. Terms of sale back

(1) Terms of conditional sale back

During the last two interest accrual years within the term of the A Share Convertible Bonds under the issuance, if the closing prices of the A Shares on any 30 consecutive trading days are lower than 70% of the prevailing conversion price, the A Share Convertible Bond Holders are entitled to sell back all or part of their A Share Convertible Bonds to the Company at par plus the then accrued interest (formula for calculating the then accrued interest is set out in relevant contents of terms of redemption).

In the event that an adjustment to the conversion price is made during the aforesaid 30 trading days, the amount for trading days prior to the date of the adjustment shall be calculated based on the conversion price and the closing price of the A Shares before the adjustment, while the amount for trading days after the adjustment shall be calculated based on the conversion price and the closing price after the date of the adjustment. In the event that there is a downward adjustment to the conversion price, the aforesaid “30 consecutive trading days” shall be re-counted from the first trading day following the adjustment to the conversion price.

During the last two interest accrual years within the term of the A Share Convertible Bonds under the issuance, the A Share Convertible Bond Holders can exercise their sale back rights once every year upon the first satisfaction of the conditions of the sale back in accordance with the abovementioned terms. If the A Share Convertible Bond Holders, upon the first satisfaction of the conditions of the sale back, do not apply for and exercise their sale back rights during the sale back declaration period specified by the Company, they are not entitled to exercise their sale back rights during that interest accrual year. The A Share Convertible Bond Holders are not allowed to exercise part of their sale back rights repeatedly.

(2) Additional terms of sale back

If the actual use of proceeds from the Proposed Issuance of A Share Convertible Bonds under the issuance significantly differs from the undertakings of the use of proceeds set out by the Company in the Offering Document, and such a change is regarded as a change in the use of proceeds by relevant provisions of the CSRC or determined by the CSRC, the A Share Convertible Bond Holders will be entitled to a one-off right to sell all or part of the A Share Convertible Bonds back

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to the Company at par plus the then accrued interest. The A Share Convertible Bond Holders can exercise their sale back rights upon the satisfaction of the additional terms of sale back during the additional sale back declaration period as announced by the Company. If the A Share Convertible Bond Holders do not exercise their sale back rights during the declaration period, they shall be deemed to abandon the rights (formula for calculating the then accrued interest is set out in relevant contents of terms of redemption).

13. Entitlement to dividend in the year of conversion

The new A Shares to be issued as a result of the conversion of the A Share Convertible Bonds shall rank pari passu with all the existing A Shares. All ordinary Shareholders of A Shares (including those becoming ordinary Shareholders as a result of the conversion of the A Share Convertible Bonds) whose names are recorded on the register of members of the Company on the share registration date for dividend distribution shall be entitled to receive the dividend of that period and equal rights and interests.

14. Method of issuance and target investors

The actual method of the Issuance of the A Share Convertible Bonds will be determined by the Board and its authorised persons upon negotiation with the sponsor (the lead underwriter), subject to authorisation at the AGM or the extraordinary general meeting and the Class Meetings. The target investors of the A Share Convertible Bonds are natural persons, legal persons, securities investment funds and other investors in compliance with the legal requirements, who have maintained securities accounts in the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (excluding those prohibited by national laws and regulations).

15. Subscription arrangement for the existing A Shareholders

The existing A Shareholders are entitled to the pre-emptive rights to subscribe for the A Share Convertible Bonds under the issuance. The existing A Shareholders may choose not to exercise such rights. It will be proposed at the general meeting and the Class Meetings to authorise the Board and its authorised persons to determine the specific portion of preferential subscription of existing A Shareholders upon negotiation with the sponsor (the lead underwriter) in accordance with the actual situations at the time of the issuance. Such determination shall be disclosed in the Announcement Regarding Issuance. Such preferential subscription shall be subject to the Company Law, the Hong Kong Listing Rules and any other applicable laws, regulations and rules of any government or regulatory authorities, including but not limited to rules and requirements regarding connected transactions.

– 18 –

The balance other than preferential subscription of existing A Shareholders and the portion of the pre-emptive rights waived by existing A Shareholders will be either offered to institutional investors offline or issued by way of online pricing through the trading system of the SZSE, with the remaining balance underwritten by the underwriter(s) in case of undersubscription.

16. Matters relating to A Share Convertible Bond Holders’ meetings

(1) Rights of the A Share Convertible Bond Holders:

(a) to receive agreed interests in accordance with the number of the A Share Convertible Bonds held by A Share Convertible Bond Holders;
(b) to convert the A Share Convertible Bonds held by A Share Convertible Bond Holders into A Shares of the Company according to the agreed conditions;
(c) to exercise right of sale back on agreed conditions;
(d) to assign, bestow or pledge the A Share Convertible Bonds held by A Share Convertible Bond Holders in accordance with the provisions of laws, administrative regulations and the Articles of Association;
(e) to receive relevant information in accordance with the provisions of laws and the Articles of Association;
(f) to request the Company to repay the principal and interest of the A Share Convertible Bonds within the agreed period and by the agreed manner;
(g) right to attend the meetings of A Share Convertible Bond Holders, either in person or by proxy, and vote in accordance with relevant provisions under laws and administrative regulations; and
(h) other rights as creditors of the Company prescribed by laws, administrative regulations and the Articles of Association.

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(2) Obligations of the A Share Convertible Bond Holders:

(a) to abide by the relevant terms of the issuance of A Share Convertible Bonds by the Company;
(b) to pay the subscription amount in accordance with the number of A Share Convertible Bonds subscribed for;
(c) to abide by the effective resolutions approved at the meetings of A Share Convertible Bond Holders;
(d) not to request the Company to make prepayment of the principal and interest of A Share Convertible Bonds, unless otherwise required by laws and regulations, or otherwise agreed in the Offering Document of A Share Convertible Bonds; and
(e) other obligations required to be undertaken by A Share Convertible Bond Holders prescribed by laws, administrative regulations and the Articles of Association.
(3) During the term of A Share Convertible Bonds, an A Share Convertible Bond Holders’ meeting shall be convened upon the occurrence of any of the following events:
(a) the Company proposes to change the terms of the Offering Document of A Share Convertible Bonds;
(b) proposed amendments to the rules for A Share Convertible Bond Holders’ meetings;
(c) the Company defaults in paying the principal and interests of A Share Convertible Bonds for the current period on time;
(d) the Company undertakes a capital reduction (except for a capital reduction to repurchased shares under a share incentive scheme), merger, division, dissolution or files for bankruptcy;
(e) any material change arises from the guarantors (if any) or the collaterals (if any);
(f) inability to perform duties duly by the management of the Company leads to serious uncertainties on the Company’s ability to repay debts, and actions should be taken in accordance with laws;

– 20 –

(g) the Company proposes a debt restructuring plan;
(h) other circumstances where the Board of the Company or A Share Convertible Bond Holders, either individually or jointly, holding 10% or more of the aggregate nominal value of the outstanding A Share Convertible Bonds for the period, propose(s) in writing to convene;
(i) other matters which may significantly and materially affect the interests of A Share Convertible Bond Holders;
(j) other matters required to be considered and determined at the meetings of the A Share Convertible Bond Holders in accordance with the provisions of the laws, administrative regulations, the CSRC, the SZSE, and the rules of the meetings of the A Share Convertible Bond Holders.
(4) The following entities or persons may propose an A Share Convertible Bond Holders’ meeting:
(a) the Board through proposal;
(b) A Share Convertible Bond Holders, either individually or jointly, holding 10% or more of the aggregate nominal value of the outstanding A Share Convertible Bonds for the period through written proposal;
(c) other entities or persons prescribed by the laws, regulations or the CSRC.

The Company shall provide in the Offering Document the measures to protect the interests of the A Share Convertible Bond Holders and the rights of permission of A Share Convertible Bond Holders’ meetings, the procedures and the conditions for the resolutions to become effective.

17. Use of proceeds

The total amount of proceeds from the Proposed Issuance of A Share Convertible Bonds (including issuance expense) will not exceed RMB2.15 billion (inclusive), which will be used for the following projects after deducting the issuance expense:

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No. Item 1 Project for subscription for certain equity interests of Minera Exar 2 Renovation and expansion project for ten thousand tonne lithium salt 3 Replenishment of working capital Total	Total investment made in project (RMB0’000) 107,200.00 76,585.00 60,500.00 244,285.00	Amount of proceeds intended to be used (RMB0’000) 107,200.00 47,300.00 60,500.00 215,000.00

Before the receipt of the proceeds from the Proposed Issuance of A Share Convertible Bonds, the Company will implement the projects utilising its own funds in accordance with the actual progress of the projects. Upon receipt of the proceeds, the proceeds will be used to replace the remaining funds and cover the spent funds. The Board may make adjustment to the proposed investment amount of the proceeds for the above one or multiple projects and the priority thereof, based on the actual situation of project progress, provided that the investment projects for the proceeds shall not be changed. After the receipt of the proceeds of A Share Convertible Bonds, if the actual net proceeds after deducting the issuance expense are less than the amount of the total amount of proceeds proposed to be invested, the shortfall should be financed by the own funds of the Company.

18. Guarantee and security

There is no guarantee provided in relation to A Share Convertible Bonds under the issuance.

19. Deposit account for proceeds raised

The Company has established the Administrative Measures for the Proceeds Raised. The proceeds of the A Share Convertible Bonds shall be maintained in an account designated by the Board. Details regarding the opening of the account will be determined by the Board before the issuance.

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20. Validity period of the A Share Convertible Bond Issuance Plan

The Proposed Issuance of A Share Convertible Bonds will be valid for 12 months from the date of the considering and passing of the A Share Convertible Bonds Issuance Plan at the AGM or extraordinary general meetings and the Class Meetings. If the A Share Convertible Bonds Issuance Plan of the Company is approved by the CSRC within the validity period, the validity period will automatically extend to the completion of the issuance.

IV. POSSIBLE SUBSCRIPTION FOR A SHARE CONVERTIBLE BONDS BY CONNECTED PERSONS

All of the A Shareholders are entitled to the pre-emptive rights to subscribe for the A Share Convertible Bonds under the A Share Convertible Bond Issuance Plan of the Company.

The terms of the Possible Subscription for A Share Convertible Bonds by connected persons (other than the subscription amount) are the same as the terms and conditions which are set out in the A Share Convertible Bond Issuance Plan. Based on the maximum issuance size of the Proposed Issuance of A Share Convertible Bonds (i.e. RMB2.15 billion) and the direct shareholding percentage of connected persons in the A Shares of the Company (i.e. 36.87%), the maximum subscription amounts under the Possible Subscription for A Share Convertible Bonds by connected persons are RMB792.6770 million.

Names of the connected persons, their relationship with the Company, the number of A Shares held by them, the percentage of A Shares held by them out of the total share capital of A Shares and the maximum subscription amounts under the Possible Subscription for A Share Convertible Bonds by them are set out as follows:

				Maximum
				subscription
			Percentage of A	amounts under
			Shares held by	the Possible
			them out of the	Subscription for A
	Relationship with the	Number of A	total share capital	Share Convertible
Name	Company	Shares	of A Shares	Bonds
			(%)	(RMB0’000)
LI Liangbin	Actual controller and	269,770,452.00	24.20%	52,023.34
	Chairman of the Company
XIONG Jianlang	Actual controller	5,837,160.00	0.52%	1,125.66
HUANG Wen	Actual controller	11,316,210.00	1.02%	2,182.25
LI Liangxue	Actual controller	810,900.00	0.07%	156.38
LUO Shunxiang	Actual controller	2,829,972.00	0.25%	545.74
LI Huabiao	Actual controller	213,372.00	0.02%	41.15

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				Maximum
				subscription
			Percentage of A	amounts under
			Shares held by	the Possible
			them out of the	Subscription for A
	Relationship with the	Number of A	total share capital	Share Convertible
Name	Company	Shares	of A Shares	Bonds
			(%)	(RMB0’000)
WANG Xiaoshen	Vice Chairman and Vice	100,898,904.00	9.05%	19,457.64
	President of the Company
SHEN Haibo	Director and Vice President	14,273,568.00	1.28%	2,752.56
DENG Zhaonan	Director and Vice President	2,852,928.00	0.26%	550.17
TANG Xiaoqiang	Supervisor	300.00	0.00%	0.06
DENG Jianping	Deemed as a connected person	70,000.00	0.01%	13.50
	due to the relation with the
	Director, DENG Zhaonan
CHEN Liangguo	Deemed as a connected person	15,000.00	0.00%	2.89
	due to the relation with the
	Director, LI Liangbin
CHEN Qingbo	Deemed as a connected person	7,500.00	0.00%	1.45
	due to the relation with the
	Director, LI Liangbin
ZHU Hui	Deemed as a connected person	7,500.00	0.00%	1.45
	due to the relation with the
	Director, LI Liangbin
ZHU Wei	Deemed as a connected person	30,000.00	0.00%	5.79
	due to the relation with the
	Director, LI Liangbin
LIU Feng	Supervisor of a subsidiary of	97,500.00	0.01%	18.80
	the Company
ZHU Shigui	General manager of a	216,500.00	0.02%	41.75
	subsidiary of the Company
LIAO Lu	Deemed as a connected person	7,500.00	0.00%	1.45
	due to the relation with
	the general manger of a
	subsidiary of the Company,
	ZHU Shigui
GE Zhimin	General manager of a	465,900.00	0.04%	89.85
	subsidiary of the Company
XIE Shaozhong	General manager of a	229,500.00	0.02%	44.26
	subsidiary of the Company
XIAO Haiyan	General manager of a	229,650.00	0.02%	44.29
	subsidiary of the Company

– 24 –

Name Relationship with the Company LI Liang General manager of a subsidiary of the Company LI Liangyao General manager of a subsidiary of the Company ZENG Zuliang General manager of a subsidiary of the Company ZHANG Baoxiu General manager of a subsidiary of the Company Total	Number of A Shares 142,500.00 95,100.00 270,000.00 360,000.00 411,047,916	Percentage of A Shares held by them out of the total share capital of A Shares Maximum subscription amounts under the Possible Subscription for A Share Convertible Bonds (%) (RMB0’000) 0.01% 27.48 0.01% 18.34 0.02% 52.07 0.03% 69.42 36.87% 79,267.70

V. REASONS FOR AND BENEFITS OF THE ISSUANCE OF H SHARES AND THE ISSUANCE OF A SHARE CONVERTIBLE BONDS

The proceeds from the Issuance of H Shares and the Proposed Issuance of A Share Convertible Bonds, after deducting related issuance expense, will be utilised for investment in mineral resources and development and construction, as well as replenishment of working capital, and will be favorable for further consolidating the main advantages of the Company, enhancing the core competitiveness of the business and facilitating the sustainable development of the Company.

VI. IMPLICATIONS ON THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS AND THE POSSIBLE SUBSCRIPTION FOR A SHARE CONVERTIBLE BONDS UNDER THE PRC REGULATORY REQUIREMENTS

The A Share Convertible Bonds proposed to be issued by the Company may lead to the issuance of new A Shares upon the exercise of the conversion rights of the A Share Convertible Bonds, the actual number of which depends on a number of factors, including the conversion price of the A Share Convertible Bonds. The Board considers that the conversion of A Share Convertible Bonds into new A Shares will dilute the interests of the existing A Shareholders in the Company’s share capital.

– 25 –

Pursuant to the Articles of Association and the provisions of the relevant PRC laws and regulations, the Proposed Issuance of A Share Convertible Bonds shall subject to, among others, the Shareholders’ approval at the general meeting and the Class Meetings, and approvals from the relevant PRC regulatory authorities.

VII. IMPLICATIONS UNDER THE HONG KONG LISTING RULES

To the best of the Company’s knowledge and the Proposed Subscribers’ confirmation, targeted subscribers of the Issuance of H Shares included the entities invested, controlled or designated by LI Liangbin, the single largest Shareholder and the Chairman of the Company in compliance with relevant laws and regulations, and the entities invested, controlled or designated by WANG Xiaoshen, the Vice Chairman of the Company in compliance with relevant laws and regulations, other overseas natural persons, institutional investors who are independent of the Company and not connected persons of the Company, and other eligible investors. The Proposed Subscribers constitute connected persons under the Hong Kong Listing Rules. Accordingly, the transaction constitutes the connected transaction under the Hong Kong Listing Rules and is subject to the requirements of reporting, announcement and Independent Shareholders’ approval under Chapter 14A of the Hong Kong Listing Rules. The Proposed Subscribers also constitute related parties under the Shenzhen Listing Rules and the transaction will constitute a related party transaction pursuant to relevant PRC laws, which is subject to approval of Independent Shareholders.

Pursuant to Rule 19A.38 of the Hong Kong Listing Rules, the Proposed Issuance of H Shares under the Specific Mandate and the Proposed Issuance of A Share Convertible Bonds are subject to the requirements for Shareholders’ approvals at the AGM or the extraordinary general meeting and the Class Meetings.

Pursuant to the Hong Kong Listing Rules, if connected persons exercise their pre-emptive rights to subscribe for the A Share Convertible Bonds, the subscription will constitute a connected transaction under Chapter 14A of the Hong Kong Listing Rules and be subject to the requirements of reporting, announcement and Independent Shareholders’ approval under the Hong Kong Listing Rules. All existing A Shareholders of the Company are entitled to pre-emptively subscribe for the A Share Convertible Bonds on a pro rata basis. No Shareholders can enjoy any privilege in the capacity of connected persons of the Company.

LI Liangbin, WANG Xiaoshen, SHEN Haibo and DENG Zhaonan are deemed to have material interests in the Possible Subscription for A Share Convertible Bonds and have abstained from voting on the relevant Board resolution. Save the above Directors, no Directors are interested or deemed to be materially interested in the above transaction. In addition, no Directors shall abstain from voting on the resolution in relation to the Proposed Issuance of A Share Convertible Bonds.

– 26 –

The Board expects that the Company will maintain sufficient public float to meet the applicable minimum requirement under the Hong Kong Listing Rules.

The Directors (including independent non-executive Directors) consider that terms of the issuance of H Shares to connected persons and the Possible Subscription for A Share Convertible Bonds by connected persons are (i) fair and reasonable; (ii) entered on normal or more favorable commercial terms and conducted in the ordinary and usual course of business of the Company; and (iii) in the interests of the Company and the Shareholders as a whole.

VIII. EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

On 16 October 2018, the Company publicly issued 200,185,800 H Shares, with net proceeds of USD404,400,500. According to the plan on use of proceeds as set out in the prospectus of the Company dated 27 September 2018, approximately 58% of the net proceeds is intended to be used for (i) investments and acquisitions of upstream lithium resources, and (ii) funding capital expenditures in connection with the exploration of upstream lithium resources as well as the expansion of production capacity of lithium compounds, lithium metals, lithium batteries and lithium recycling; approximately 22% of the net proceeds is intended to be used to provide financial assistance to Lithium Americas Corp.; approximately 10% of the net proceeds is intended to be used for our research and development efforts, in particular on solid-state lithium batteries; approximately 10% of the net proceeds is intended to be used for our working capital and general corporate purposes. As at 31 December 2018, the Company utilised proceeds of USD113,020,700 in aggregate, and the balance of proceeds amounted to USD291,643,300 (including interest income generated from proceeds deposited with the designated proceeds account). The use of proceeds as at December 31, 2018 is set out as follows:

Percentage Use of Use of Proceeds Disclosed Proceeds Disclosed in the Prospectus in the Prospectus Usage Details Used Amount Investments and acquisitions 58%, approximately Upstream lithium USD113,020,700 of upstream lithium USD234,550,000 resource: resources, and (ii) funding acquisition of 37.5% capital expenditures equity interests in in connection with the the Cauchari-Olaroz exploration of upstream Project and loans for lithium resources as the same project well as the expansion of production capacity of lithium compounds, lithium metals, lithium batteries and lithium recycling.

– 27 –

	Percentage Use of
Use of Proceeds Disclosed	Proceeds Disclosed
in the Prospectus	in the Prospectus	Usage Details	Used Amount
Financial assistance to	22%, approximately	Currently unused	Currently unused
Lithium Americas Corp.,	USD88,970,000
which will use the funds to
cover capital expenditure
for construction of the
Cauchari-Olaroz Project
Research and development	10%, approximately	Currently unused	Currently unused
efforts, in particular on	USD40,440,000
solid-state lithium batteries
Working capital and general	10%,	Currently unused	Currently unused
corporate purposes	approximately
	USD40,440,000

Save for the above activities, the Company has not conducted any fundraising activities involving the issuance of equity securities within 12 months immediately before the date of this announcement.

IX. PRINCIPAL BUSINESS OF MAJOR PARTY TO THE TRANSACTION

The Company is principally engaged in the production of lithium hydroxide, lithium carbonate, lithium fluoride and butyl lithium; and the production, processing and sales of non-ferrous metals, batteries, instrumentation components, machinery and equipment, chemical products, chemical raw materials and chemical products. It offers five major categories of more than 40 lithium compounds and metal products, which we regard as one of the most comprehensive product offerings among the lithium product manufactures. Products of the Company are widely applied in various fields, to be specific, including manufacturing of electric vehicles chemicals and pharmaceuticals. The Company possesses a vertically integrated business model, which covers important fields of the value chain including upstream lithium extraction, midstream lithium compounds and metals processing as well as downstream lithium battery production and recycling. It started as a midstream manufacturer of lithium compounds and lithium metals, thus ensuring competitive supply of lithium raw materials, securing cost and operation efficiency, creating synergies between various business segments and gathering latest market information and developing cutting-edge technologies.

– 28 –

X. ADVICE FROM THE INDEPENDENT BOARD COMMITTEE

Upon verification, the Independent Board Committee considers that the Issuance of H Shares under the Specific Mandate to connected persons and the Possible Subscription for A Share Convertible Bonds by connected persons have obtained necessary approval and authorisation, and relevant review procedure has been performed, which are in compliance with the provisions of the Hong Kong Listing Rules, the Company Law, the Securities Law and other laws and regulations, normative documents and the Articles of Association. Meanwhile, the reasons for, the number and price of the Issuance of H Shares under the Specific Mandate to connected persons and the Possible Subscription for A Share Convertible Bonds by connected persons are legal and compliant, without prejudice to the legitimate interests of the Company and the Shareholders as a whole, particularly the minority Shareholders. Accordingly, we agree to the matters concerning the Issuance of H Shares under the Specific Mandate to connected persons by the Company and the Possible Subscription for A Share Convertible Bonds by connected persons, and agree that the proposal be submitted to the AGM or the extraordinary general meeting and the Class Meetings for consideration.

The matters concerning the Issuance of H Shares under the Specific Mandate to connected persons and the Possible Subscription for A Share Convertible Bonds by connected persons are to be submitted to the AGM or the extraordinary general meeting and the Class Meetings of the Company for consideration and approval. During consideration of the relevant proposals at the AGM or the extraordinary general meeting and the Class Meetings, LI Liangbin and WANG Xiaoshen, being connected persons with material interests in the matters concerning the Issuance of H Shares under the Specific Mandate to connected persons, shall abstain from voting on such proposals at the meetings. LI Liangbin, XIONG Jianlang, HUANG Wen, LI Liangxue, LUO Shunxiang, LI Huabiao, WANG Xiaoshen, SHEN Haibo, DENG Zhaonan, TANG Xiaoqiang, DENG Jianping, CHEN Liangguo, CHEN Qingbo, ZHU Hui, ZHU Wei, LIU Feng, ZHU Shigui, LIAO Lu, GE Zhimin, XIE Shaozhong, XIAO Haiyan, LI Liang, LI Liangyao, ZENG Zuliang and ZHANG Baoxiu, being connected persons with material interests in the matters concerning the Possible Subscription for A Share Convertible Bonds by connected persons, shall abstain from voting on such proposals at the meetings.

– 29 –

XI. AGM OR EXTRAORDINARY GENERAL MEETING AND CLASS MEETINGS

AGM or extraordinary general meeting and Class Meetings will be convened by the Company to consider and, if thought fit, approve, among others, the matters concerning the Proposed Issuance of H Shares under Specific Mandate and connected transaction, the Proposed Grant of Specific Mandate, the Proposed Issuance of A Share Convertible Bonds and the Possible Subscription for A Share Convertible Bonds by connected persons. The Independent Board Committee has been established to advise the Independent Shareholders on the Proposed Issuance of H Shares under Specific Mandate and connected transaction and the Possible Subscription for A Share Convertible Bonds by connected persons. Upon the approval of Independent Board Committee, the Company will appoint the independent financial advisor to advise the Independent Board Committee and the Independent Shareholders on the same matters and provide recommendation on voting.

The Proposed Subscribers, who are the connected persons of the Company, shall abstain from voting on the resolutions on the Issuance of H Shares and the Grant of Specific Mandate at the AGM or the extraordinary general meeting and the Class Meetings. Save as mentioned above, to the best of the Directors’ knowledge, information and belief, none of the other Shareholders has any material interest in the subscription for H Shares and therefore shall abstain from voting on such resolution at the AGM or the extraordinary general meeting and the Class Meetings.

Pursuant to the Hong Kong Listing Rules, any of the Shareholders and their associates (as defined under the Hong Kong Listing Rules) shall abstain from voting on the resolution approving the Possible Subscription for A Share Convertible Bonds. Accordingly, LI Liangbin, XIONG Jianlang, HUANG Wen, LI Liangxue, LUO Shunxiang, LI Huabiao, WANG Xiaoshen, SHEN Haibo, DENG Zhaonan, TANG Xiaoqiang, DENG Jianping, CHEN Liangguo, CHEN Qingbo, ZHU Hui, ZHU Wei, LIU Feng, ZHU Shigui, LIAO Lu, GE Zhimin, XIE Shaozhong, XIAO Haiyan, LI Liang, LI Liangyao, ZENG Zuliang and ZHANG Baoxiu shall abstain from voting on the resolution on the Possible Subscription for A Share Convertible Bonds. Save as mentioned above, to the best of the Directors’ knowledge, information and belief, none of the other Shareholders has any material interest in the Possible Subscription for A Share Convertible Bonds and therefore shall abstain from voting on such resolution at the AGM or the extraordinary general meeting and the Class Meetings.

– 30 –

In addition, to the best of the Directors’ knowledge, information and belief, none of the Shareholders will be required to abstain from voting on the relevant resolutions on the Proposed Issuance of H Shares, the Proposed Grant of Specific Mandate, the Proposed Issuance of A Share Convertible Bonds and the Possible Subscription for A Share Convertible Bonds.

A circular containing, among others, the details of the Proposed Issuance of H Shares under the Specific Mandate and connected transaction, the Proposed Grant of Specific Mandate, the Proposed Issuance of A Share Convertible Bonds and the Possible Subscription for A Share Convertible Bonds by connected persons and other matters will be despatched to Shareholders in due course.

Investors should be aware that the Proposed Issuance of H Shares and the Proposed Issuance of A Share Convertible Bonds are subject to: (i) approvals of Shareholders at the AGM and the Class Meetings; and (ii) approvals from CSRC and other relevant authorities. As the Proposed Issuance of H Shares and the Proposed Issuance of A Share Convertible Bonds are still subject to the fulfillment of various conditions thereof, the Proposed Issuance of H Shares and the Proposed Issuance of A Share Convertible Bonds may not proceed or may not become unconditional or may not become effective. Investors and potential investors in Shares of the Company should exercise caution and only rely on the information issued by the Company when dealing, or contemplate dealing, in the Shares.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings:

“AGM” or “2018 AGM” the 2018 annual general meeting of the Company to be held at 2:00 p.m., on Tuesday, June 11, 2019 at the Conference Room, 4[th] Floor, R&D Building at the Company’s Headquarter, Longteng Road, Economic Development Zone, Xinyu, Jiangxi Province, PRC

“Annual Interest” the interest accrued to the A Share Convertible Bonds Holders in each year on each anniversary of the date of the issuance, calculated based on the aggregate nominal value of the A Share Convertible Bonds held by such holders.

“A Share(s)” the RMB denominated ordinary share(s) of the Company, with a nominal value of RMB1.00 each, which are listed and traded on the Shenzhen Stock Exchange (Stock code: 002460)

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“A Shareholder(s)”

holders of A Shares

“A Share Class Meeting” the class meeting of A Shareholders
“A Share Convertible Bond Holder(s)”
holder(s) of A Share Convertible Bonds proposed to be issued the Company
“A Share Convertible Bond Issuance Plan”
the A Share Convertible Bonds issuance plan of the Company, to be considered and, if though fit, approved at the AGM and the Class Meetings, details of which are set out in the announcement
“A Share Convertible Bonds” the convertible corporate bonds in the total amount of not more than RMB2.15 billion which are convertible into new A Shares and proposed to be issued by the Company within the PRC
“associate(s)”
has the meaning ascribe thereto under the Hong Kong Listing Rules
“Articles of Association”
the articles of association of the Company, as amended from time to time
“Board”
the board of Directors of the Company
“Class Meetings”
the class meeting of A Shareholders and the class meeting of H Shareholders
“Company”
Ganfeng Lithium Co., Ltd. ( 江西贛鋒鋰業股份有限公司 ), a joint stock company established in the PRC on March 2, 2000 and converted from our predecessor Jiangxi Ganfeng Lithium Company Limited ( 江西贛鋒鋰業有限公司 , formerly known as Xinyu Ganfeng Lithium Company Limited ( 新余贛鋒鋰業有限公司 )) into a joint stock company with limited liability under the PRC Company Law on December 18, 2007, the A Shares of which have been listed on the SZSE since August 10, 2010 (Stock Code: 002460), and except where the context otherwise requires includes its predecessors and subsidiaries
“connected person(s)”
has the meaning ascribed thereto under the Hong Kong Listing Rules

– 32 –

“connected transaction(s)” has the meaning ascribed thereto under the Hong Kong Listing Rules
“Company Law”

Company Law of the People’s Republic of China, as amended from time to time

“Director(s)” the director(s) of the Company
“H Share(s)” overseas listed ordinary shares in the share capital of the Company, with a nominal value of RMB1.00 each, which are listed and traded on the Stock Exchange (Stock code: 1772)
“H Shareholder(s)” holders of H Shares
“H Share Class Meeting” the class meeting of H Shareholders
“SFO”
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“Hong Kong Listing Rules”
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“Independent Board Committee”
an independent committee of the Board comprising all independent non-executive Directors, namely Mr. GUO Huaping, Mr. HUANG Huasheng, Mr. LIU Jun and Ms. WONG Sze Wing, formed for the purpose of advising the Independent Shareholders in relation to the connected transactions
“Independent Shareholder(s)” Shareholders who are not required to abstain from voting on the resolution in relation to the connected transactions
“Issuance of H Shares”
the proposed issuance of not more than 50,000,000 H Shares of the Company
“Offering Document” offering document of the Public Issuance of A Share Convertible Corporate Bonds by Ganfeng Lithium Co., Ltd.
“PRC”

the People’s Republic of China

– 33 –

“Proposed Subscriber(s)”

the entities of the Shares proposed to be subscribed for in the Issuance of H Shares, specifically meaning the entities invested, controlled or designated by LI Liangbin, the single largest Shareholder and the Chairman of the Company in compliance with relevant laws and regulations, and the entities invested, controlled or designated by WANG Xiaoshen, the Vice Chairman of the Company in compliance with relevant laws and regulations
“Possible Subscription for A connected persons may exercise the pre-emptive rights Share Convertible Bonds” to subscribe for the A Share Convertible Bonds under the A Share Convertible Bond Issuance Plan, the specific subscription amount and conversion price on the exercise of the pre-emptive rights shall be subject to the determination made by the Board as authorised by the AGM, based on the market conditions before the issuance
“Proposed Issuance of A Share Issuance of A Share Convertible Bonds by the Company Convertible Bonds” in accordance with the Issuance Plan of A Share Convertible Bonds
“related party(ies)”
has the meaning ascribed thereto under the Hong Kong Listing Rules
“related party transaction(s)” has the meaning ascribed thereto under the Hong Kong Listing Rules
“RMB” Renminbi, the lawful currency of the PRC
“Securities Laws” Securities Laws of the People’s Republic of China, as amended from time to time
“CSRC” China Securities Regulatory Commission
“SFC” Securities and Futures Commission of Hong Kong
“Share(s)” A Share(s) and/or H Share(s)

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“Shareholder(s)” or	holder(s) of Share(s) of the Company
“All Shareholders”
“Shenzhen Listing Rules”	the Rules Governing the Listing of Stocks on the
	Shenzhen Stock Exchange (深圳證券交易所股票上
	市規則), as amended form time to time
“Specific Mandate”	the specific mandate proposed to be granted by
	independent Directors to the Board at the AGM or
	extraordinary general meeting and Class Meetings in
	respect of the Issuance of H Shares
“SZSE”	The Shenzhen Stock Exchange
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Shares”	Shares to be subscribed for in the Issuance of H Shares
“subsidiary(ies)”	has the meaning ascribed to it under the Hong Kong
	Listing Rules
“%”	per cent.

By order of the Board GANFENG LITHIUM CO., LTD. LI Liangbin Chairman

Jiangxi, PRC April 29, 2019

As at the date of this announcement, the Board comprises Mr. LI Liangbin, Mr. WANG Xiaoshen, Mr. SHEN Haibo, Ms. DENG Zhaonan and Mr. XU Xiaoxiong as executive directors of the Company; Mr. HUANG Daifang as non-executive director of the Company; and Mr. GUO Huaping, Mr. HUANG Huasheng, Mr. LIU Jun and Ms. WONG Sze Wing as independent non-executive directors of the Company.

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