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

Mar 7, 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.

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

(Stock Code: 1772)

OVERSEAS REGULATORY ANNOUNCEMENT

This announcement is made pursuant to the disclosure requirements under Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

According to the relevant regulations of the People’s Republic of China, GANFENG LITHIUM CO., LTD. (the “ Company ”) had published “Announcement in relation to Investment in Wealth Management Products with Certain Idle Proceeds” on the website of the Shenzhen Stock Exchange (http://www.szse.cn/). The following is a translation of the official announcement solely for the purpose of providing information.

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

Jiangxi, PRC March 8, 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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Stock Code: 002460 Stock Name: Ganfeng Lithium No.: Lin 2019-013

GANFENG LITHIUM CO., LTD.

ANNOUNCEMENT IN RELATION TO INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH CERTAIN IDLE PROCEEDS

The Company and all members of its board of directors warrant that the information contained in this announcement is true, accurate and complete and that there are no false representations or misleading statements contained in or material omissions from this announcement.

At the 29th meeting of the fourth session of the board of directors of Ganfeng Lithium Co., Ltd. (the “Company”) held on March 7, 2019, the Resolution in Relation to Investment in Wealth Management Products with Certain Idle Proceeds was considered and approved, pursuant to which the Company was approved to invest in wealth management products with high security, strong liquidity and guaranteed principal with the idle proceeds of not more than RMB250 million from public issuance of convertible corporate bonds and the idle proceeds of not more than US$100 million from public issuance of overseas-listed foreign shares (H shares) in order to improve the utilisation efficiency of proceeds provided that the investment and construction of the projects financed by the proceeds would not be affected. Such proceeds can be utilised on a rolling basis during the validity period of the resolution. According to relevant provisions of the articles of association, the matter is still subject to consideration at the general meeting of the Company. Particulars are set out as follows:

I. BASIC INFORMATION ON THE PROCEEDS

1. Basic information on the proceeds from public issuance of convertible corporate bonds

As approved by the Official Reply on the Approval of Public Issuance of Convertible Corporate Bonds by Ganfeng Lithium Co., Ltd. (Zheng Jian Xu Ke [2017] No. 2049) (《關於核准江西贛鋒鋰業股份有限公司公開發行可轉換公司債券的批覆》（證監 許可[2017]2049 號）) issued by the China Securities Regulatory Commission (the

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“CSRC”), the Company raised a total of RMB928 million of proceeds by way of public issuance of 9,280,000 convertible corporate bonds with a nominal value of RMB100 each. The convertible bonds were issued at par value for a term of six years. As of December 27, 2017, the actual proceeds from convertible corporate bonds issued by the Company totaled RMB928 million and the amount net of underwriting and sponsorship fees was RMB918 million, which had been remitted by Ping An Securities Co., Ltd., to the Company’s bank account (account number: 365899991010003136165) opened at the business department of Bank of Communications, Xinyu Branch and the bank account (account number: 2230000100000129771) opened at the Export-import Bank of China, Jiangxi Branch and the bank account (account number: 791907161710808) opened at China Merchants Bank, Nanchang Branch, Jiangling Sub-branch by Jiangxi Ganfeng Battery Technology Co., Ltd. (江西贛鋒電池科技有限公司), a whollyowned subsidiary of the Company, all being special accounts designated by the Company for depositing proceeds.

After deducting the underwriting and sponsorship fees of RMB10,000,000.00 paid to the joint lead underwriters, Ping An Securities Co., Ltd. and China International Capital Corporation Limited, as well as other issuance expenses of RMB1,972,800.00, the actual proceeds amounted to RMB916,027,200.00. As the issuance expenses were entitled to a deductible input tax of RMB677,705.66, the actual net proceeds from the issuance amounted to RMB916,704,905.66 after taking account of such amount of deductible input tax.

BDO China Shu Lun Pan Certified Public Accountants LLP has issued the Verification Report on the Availability of Proceeds from Issuance of Convertible Corporate Bonds by Ganfeng Lithium Co., Ltd. (Xin Kuai Shi Bao Zi [2017] No. ZA16552) ( 信會師報 字 [2017] 第 ZA16552 號《關於江西贛鋒鋰業股份有限公司可轉換公司債券募集資 金到位情況的鑒證報告》 ).

2. Basic information on the proceeds from public issuance of overseas-listed foreign shares (H shares)

As approved by the Official Reply on the Approval of Public Issuance of Overseas-

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listed foreign shares by Ganfeng Lithium Co., Ltd. (Zheng Jian Xu Ke [2018] No. 970) (《關於核准江西贛鋒鋰業股份有限公司發行境外上市外資股的批覆》（證監許可 [2018]970 號）) issued by the CSRC and approved by The Stock Exchange of Hong Kong Limited, the Company publicly issued 200,185,800 overseas-listed foreign shares (H shares) at an issue price of HK$16.50 per share, which were listed and traded on the Main Board of the Hong Kong Stock Exchange on October 11, 2018. As of October 16, 2018, the proceeds from issuance of new H shares by the Company totaled HK$3,303,065,700.00 and the actual proceeds received after deducting the amount of HK$64,957,712.70 comprising the underwriting commission, sponsorship fee and relevant trading fees charged by the Securities and Futures Commission of Hong Kong and the Hong Kong Stock Exchange, amounted to HK$3,238,107,987.30 (equivalent to RMB2,849,535,028.82), which had been remitted to the special account (account number: 2093773007) of the Company opened for the proceeds at CITIBANK N.A. HONG KANG. After deducting the brokerage fee, listing application fee, material documentation fee and other issuance expenses paid by the Company for the issuance of overseas listed H shares, which had been translated into RMB30,749,736.46, the actual net proceeds amounted to RMB2,818,785,292.36. BDO China Shu Lun Pan Certified Public Accountants LLP has verified such proceeds and issued the capital verification report (Xin Kuai Shi Bao Zi [2018] No. ZA16008).

II. USE AND BALANCE OF PROCEEDS

1. Use and balance of proceeds from public issuance of convertible corporate bonds

As at December 31, 2018, the balance of proceeds from public issuance of convertible corporate bonds by the Company amounted to RMB278,020,892.34, the details of which are as follows:

	No.	Project name	Committed investment amount of the proceeds (RMB0’000)	Accumulative investment amount of the proceeds as at December 31, 2018 (RMB 0’000) Note	Balance of proceeds as at December 31, 2018 (RMB 0’000) Note

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1	Power battery project of high capacity lithium-ion with an annual output of 600 million watt hours	28,800.00	28,812.21	0
2	Battery-grade lithium carbonate construction project with an annual output of 15,000 tons	33,800.00	8,567.28	26,250.61
3	Lithium hydroxide mono-hydrate project with an annual output of 20,000 tons	30,200.00	28,678.82	1,551.48
	Total	92,800.00	66,058.31	27,802.09

Note: The accumulative investment amount and balance of the proceeds as at December 31, 2018 include the interest income from deposits in the special account and that from purchase of wealth management products.

2. Use and balance of proceeds from public issuance of overseas-listed foreign shares (H shares)

As at December 31, 2018, out of the proceeds from public issuance of overseas-listed foreign shares (H shares) by the Company, US$113,020,736.42 was utilised and the balance amounted to US$291,643,268.92.

Amount of net proceeds expressed in	Accumulative investment amount of the proceeds as at	Balance of proceeds as at December 31, 2018
USD equivalents (US$0’000)	December 31, 2018 (US$ 0’000)	(US$ 0’000)
40,440.05	11,302.07	29,164.33

Note: Balance of proceeds as at December 31, 2018 includes the interest income from deposits in the special accounts

III. INFORMATION ON THE INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH CERTAIN IDLE PROCEEDS

In line with the principle of maximizing the shareholders’ interests, the Company

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intends to invest in wealth management products with high security, strong liquidity and guaranteed principal with the idle proceeds of not more than RMB250 million from public issuance of convertible corporate bonds and the idle proceeds of not more than US$100 million from public issuance of overseas-listed foreign shares (H shares) in order to improve the utilisation efficiency of proceeds, provided that the investment and construction of projects financed by the proceeds would not be affected. Particulars are set out as follows:

1. Purpose of the investment

To improve the utilisation efficiency of idle proceeds of the Company and increase the Company’s gain on investment provided that the investment and construction of projects financed by the proceeds would not be affected and the safety of proceeds is guaranteed, and the use of proceeds in the prospectus disclosed by the Company will not be changed.

As disclosed in the prospectus of the Company dated 27 September 2018 in connection with the offering of the Company’s H Shares, to the extent that the net proceeds are not immediately applied to the purposes as disclosed in the prospectus and to the extent permitted by applicable law and regulations, the Company intend to deposit the net proceeds into short-term demand deposits and/or money market instruments. Therefore, the investment does not deviate from the purposes for which proceeds from the H share offering were to be used as stated in the prospectus.

2. Investment amount

The amount available for use by the Company shall comprise the idle proceeds of not more than RMB250 million from public issuance of convertible corporate bonds and the idle proceeds of not more than US$100 million from public issuance of overseaslisted foreign shares (H shares). Such proceeds can be utilised on a rolling basis within the above-mentioned limit during the validity period.

3. Investment categories

The categories to be invested shall be short-term demand deposits or money market instruments, short-term wealth management products with low risk, fixed income or guaranteed principal, the issuers of which are commercial banks and other financial

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institutions other than commercial banks. The above categories do not fall within the scope of venture capital covered by Chapter VII, Section 1: Venture Capital of the Guidelines for the Standardised Operation of Companies Listed on the Small and Medium-sized Enterprise Board.

The principal-guaranteed wealth management products purchased with the idle proceeds shall not be subject to pledge, and the special settlement account for such products shall not be used for deposit of funds other than the proceeds or for any other purposes. In the case of opening or closing a special settlement account for products, the Company shall file with the Shenzhen Stock Exchange and make an announcement in a timely manner.

4. Validity period

The investment shall be effective for twelve months commencing from the date of approval at the general meeting of the Company.

5. Implementation method

The Chairman of the board of the Company shall be authorised, within the amount limit, to exercise the decision-making rights and execute relevant contractual documents in relation to the investment, including but not limited to selecting suitable issuers of wealth management products, specifying the wealth management amount and duration time, choosing the categories of wealth management products, executing contracts and agreements, etc.

6. Information disclosure

The Company shall file with the Shenzhen Stock Exchange and make an announcement on any opening or closing of special settlement account for products in a timely manner, and disclose relevant information on the purchase of wealth management products by the Company in its periodical reports such as the interim report and annual report.

IV. INVESTMENT RISKS AND RISK CONTROL

1. Investment risks

In spite of the low-risk investment attribute of wealth management products, the financial market is highly susceptible to the macro-economy. Therefore, the Company

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will make investment in due course and in moderation in light of the economic trend and the changes in the financial market. Notwithstanding, the impact of market fluctuations on the investment shall not be taken into no consideration.

1. The Company intends to take the following measures in response to the investment risks:

2. (1) The specific investments shall be made by the management after being approved by the Chairman of the board of the Company with relevant contracts signed by the same. The department responsible for specific implementation shall make timely analysis on and keep track of the wealth management product investment target and project progress. Where there is any risk factor likely to impact the capital security of the Company identified after assessment, corresponding measures will be taken immediately to control investment risks.

3. (2) The audit department will carry out prior review, in-process supervision and post audit on the short-term wealth management business of the Company. The audit department is responsible for reviewing the approval, actual operation, capital utilisation and the profits and losses in relation to the wealth management business, prodding the finance department into dealing with relevant accounts in a timely manner and conducting verification on the accounting treatment.

4. (3) The independent directors and the board of supervisors shall have the rights to supervise and inspect the capital utilisation, and be allowed to engage professional institutions for audit when necessary.

5. (4) The Company will disclose its investment in wealth management products in details during the reporting period in the periodical reports in accordance with the requirements of the regulatory authorities.

V. APPROVAL PROCEDURES

The Resolution in Relation to Investment in Wealth Management Products with Certain Idle Proceeds was considered and approved at the 29th meeting of the fourth session of

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the board of directors and the 19th meeting of the fourth session of the Supervisory Committee of the Company held on March 7, 2019 and was also approved by the independent directors, the board of supervisors and the sponsor. Pursuant to relevant provisions of the articles of association, the matter is still subject to consideration at the general meeting of the Company.

VI. IMPACT ON THE COMPANY

The Company's investment in principal-guaranteed wealth management products with certain idle proceeds aims to improve the capital utilisation efficiency of the Company and increase the investment income. As such investment is made on the premise that the investment and construction of the projects financed by the proceeds are guaranteed and the proceeds are secure, the normal development of the Company’s principal business will not be affected.

Timely cash management of the temporarily idle proceeds through appropriate investment in low-risk short-term wealth management products enables the Company to reap certain investment benefits, which is conducive to further improving its overall performance and seeking better returns on investment for the Company and its shareholders.

VII. OPINIONS OF INDEPENDENT DIRECTORS

The Company's decision-making procedures regarding the investment in wealth management products with certain idle proceeds are in compliance with the articles of association, the Measures for Management of Proceeds (《募集資金管理辦法》), the Guidelines for the Regulation of Listed Companies No. 2 – Regulatory Requirements for Listed Companies on the Management and Use of Proceeds (《上市公司監管指引 第 2 號–上市公司募集資金管理和使用的監管要求》), the Guidelines of the Shenzhen Stock Exchange for Standardised Operation of Companies Listed on the Small and Medium-sized Enterprise Board (《深圳證券交易所中小企業板上市公司 規範運作指引》) and other relevant provisions. On the premise that the investment and construction of the projects financed by the proceeds are guaranteed and the proceeds

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are secure, the Company’s appropriate purchase of wealth management products with high security, strong liquidity and guaranteed principal with idle proceeds is conducive to improving the utilisation efficiency of proceeds. As such purchase does not involve any disguised change of the use of proceeds, will not affect the investment and construction of projects financed by the proceeds as well as the use of the proceeds, and therefore, is in the interests of the Company and all its shareholders, especially the minority shareholders, we agree on the Company's investment in wealth management products with certain idle proceeds.

VIII. OPINIONS OF THE BOARD OF SUPERVISORS

The Company's investment in wealth management products with high security, strong liquidity and guaranteed principal with certain idle proceeds is conducive to improving the utilisation efficiency of proceeds and increasing the investment income. As such investment will affect neither the normal utilisation of the proceeds nor the normal progress of the investment and construction of projects financed by the proceeds, does not involve any disguised change of use of the proceeds, and will do no harm to the interests of the Company and all its shareholders, especially the minority shareholders, we agree to present the resolution at the general meeting of the Company for consideration.

IX. VERIFICATION OPINION OF THE SPONSOR

(I) The Company’s Investment in Wealth Management Products with Certain Proceeds from Issuance of Convertible Bonds

On the premise that the construction of the projects financed by the proceeds is guaranteed and the proceeds are secure, the Company's investment in wealth management products with certain idle proceeds from public issuance of convertible bonds is conducive to improving the utilisation efficiency of proceeds and increasing investment income, and is in the interests of the Company and all its shareholders.

The Company's investment in wealth management products with certain idle proceeds from public issuance of convertible bonds will not affect the normal implementation of

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such projects, and involves neither disguised change of the investment targets of proceeds nor prejudice to the interests of shareholders. The Resolution in Relation to Investment in Wealth Management Products with Certain Idle Proceeds from Public Issuance of Convertible Bonds by the Company was considered and approved at the 29th meeting of the fourth session of the board of directors and the 19th meeting of the fourth session of the Supervisory Committee of the Company, the independent shareholders also expressed their explicit opinions of consent, and the decision-making procedures regarding the matter are in compliance with laws and regulations. Therefore, Ping An Securities holds no objection against the investment in wealth management products by the Company with certain idle proceeds from public issuance of convertible bonds.

(II) The Company’s Investment in Wealth Management Products with Idle Proceeds from Issuance of H Shares

The Company's investment in wealth management products with idle proceeds from issuance of H shares was considered and approved at the 29th meeting of the fourth session of the board of directors and the 19th meeting of the fourth session of the Supervisory Committee of the Company, the independent shareholders also expressed their explicit opinions of consent, and the decision-making procedures regarding the matter are in compliance with laws and regulations. On the premise that the normal development of principal business and working capital needs for daily operation of the Company and its controlled subsidiaries are not affected, the Company's investment in wealth management products with high security, strong liquidity and guaranteed principal is conducive to improving the utilisation efficiency of proceeds. Therefore, Ping An Securities holds no objection against the investment in wealth management products by the Company with idle proceeds from issuance of H shares.

X. DOCUMENTS AVAILABLE FOR INSPECTION

Resolution of the 29th meeting of the fourth session of the board of directors of the Company;

1. Resolution of the 19th meeting of the fourth session of the Supervisory Committee

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of the Company;

1. Independent opinions in relation to the matter issued by the independent directors; and

2. Verification opinion of Ping An Securities Co., Ltd. on the investment in wealth management products by Ganfeng Lithium Co., Ltd. with certain idle proceeds.

The announcement is hereby given.

The board of directors Ganfeng Lithium Co., Ltd. March 8, 2019