Ganfeng Lithium Group Co., Ltd. - Proxy Solicitation & Information Statement 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Ganfeng Lithium Co., Ltd., you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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

(Stock Code: 1772)

(1) AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(2) APPROVAL OF THE CAP FOR PROVISION OF FINANCIAL ASSISTANCE BY GFL INTERNATIONAL TO MINERA EXAR THROUGH EXAR CAPITAL IN 2019 AND RELATED PARTY TRANSACTION

(3) APPLICATION FOR BANK FACILITIES AND PROVISION OF GUARANTEES BY THE COMPANY AND ITS WHOLLY-OWNED SUBSIDIARIES
(4) CAPITAL INCREASE IN WHOLLY-OWNED SUBSIDIARY GFL INTERNATIONAL
(5) INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH SELF-OWNED FUNDS

AND

(6) INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH CERTAIN IDLE PROCEEDS

A letter from the Board is set out on pages 1 to 37 of this circular.

(i) A notice convening the EGM to be held at the conference room of the Company at 4th Floor, R&D Building at the Company’s Headquarter, Longteng Road, Economic Development Zone, Xinyu, Jiangxi Province, the PRC on Tuesday, April 23, 2019 at 2:00 p.m.; and (ii) the proxy form for use at and the reply slip in relation to the EGM were despatched by the Company on March 7, 2019 and also published and available for downloading on the websites of The Stock Exchange of Hong Kong Limited at www.hkexnews.com.hk and of the Company at www.ganfenglithium.com.

Whether or not you intend to attend the EGM, we encourage you to complete and return the proxy form in respect of the EGM in accordance with the instructions printed thereon as soon as possible and in any event not less than 24 hours prior to the commencement of such meeting (or any adjournments thereof). Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case may be) should you so wish. Shareholders who intend to attend the EGM should also complete and return the reply slip in accordance with the instructions printed thereon.

March 7, 2019

CONTENTS

		Pages
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
I.	INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
II.	AMENDMENTS TO THE ARTICLES OF ASSOCIATION. . . . . . . . . . . . . . . . . . .	2
III.	APPROVAL OF THE CAP FOR PROVISION OF FINANCIAL ASSISTANCE
	BY GFL INTERNATIONAL TO MINERA EXAR THROUGH EXAR
	CAPITAL IN 2019 AND RELATED PARTY TRANSACTION. . . . . . . . . . . . . .	3
IV.	APPLICATION FOR BANK FACILITIES AND PROVISION OF GUARANTEES
	BY THE COMPANY AND ITS WHOLLY-OWNED SUBSIDIARIES. . . . . . . . .	11
V.	CAPITAL INCREASE IN WHOLLY-OWNED SUBSIDIARY GFL
	INTERNATIONAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
VI.	INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH SELF-
	OWNED FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
VII.	INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH
	CERTAIN IDLE PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
VIII.	EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
IX.	VOTING BY WAY OF POLL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
X.	RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
XI.	RESPONSIBILITY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
APPENDIX	I – AMENDMENTS TO THE ARTICLES OF ASSOCIATION . . . . . . . . . . . . .	38

– i –

DEFINITIONS

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

“A Share(s)”

ordinary share(s) of the Company, with a nominal value of RMB1.00 each, which are subscribed for in RMB and listed on the SZSE (stock code: 002460)

“Articles of Association” the articles of association of the Company, as amended from time to time
“Board” the board of Directors
“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
“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會)
“Director(s)” the director(s) of the Company
“EGM”
the extraordinary general meeting of the Company to be held at 2:00 p.m., on Tuesday, April 23, 2019 at the Conference Room, 4th Floor, R&D Building at the Company’s Headquarter, Longteng Road, Economic Development Zone, Xinyu, Jiangxi Province, the PRC
“GFL International” GFL International Co., Limited, a private company limited by shares incorporated in Hong Kong on March 29, 2011 and a wholly-owned subsidiary of our Company
“Group” the Company and its subsidiaries

– ii –

DEFINITIONS

“H Share(s)” overseas listed foreign shares in the share capital of the Company, with a nominal value of RMB1.00 each, which are listed on the Main Board of the Stock Exchange and traded in Hong Kong dollars (stock code: 1772)
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Latest Practicable Date” March 5, 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular
“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“LITIO MINERA” LITIO MINERA ARGENTINA SA, a company incorporated in Argentine on April 5, 2010 and a non-wholly-owned subsidiary of our Company, which is owned as to 82.754% by Mariana Lithium and as to 17.246% by International Lithium. In December 2017, our shareholding in LITIO MINERA increased to 82.754% and International Lithium’s shareholding in LITIO MINERA decreased to 17.246% but such shareholding change is pending registration with local authorities
“PRC” the People’s Republic of China
“RMB” Renminbi, the lawful currency of the PRC
“Share(s)” A Share(s) and/or H Share(s)
“Shareholder(s)” holder(s) of Share(s) “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
“SZSE” The Shenzhen Stock Exchange
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“%”

per cent

– iii –

LETTER FROM THE BOARD

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

(Stock Code: 1772)

Executive Directors:

Mr. LI Liangbin Mr. WANG Xiaoshen Mr. SHEN Haibo Ms. DENG Zhaonan Mr. XU Xiaoxiong

Registered Office: Longteng Road, Economic Development Zone Xinyu City, Jiangxi Province, PRC

Principal Place of

Non-executive Directors:

Mr. HUANG Daifang

Independent non-executive Directors:

Mr. GUO Huaping Mr. HUANG Huasheng Mr. LIU Jun

Business in Hong Kong: 40/F, Sunlight Tower 248 Queen’s Road East Wanchai Hong Kong

Ms. WONG Sze Wing

March 7, 2019

To the Shareholders

Dear Sir or Madam,

(1) AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(2) APPROVAL OF THE CAP FOR PROVISION OF FINANCIAL ASSISTANCE BY GFL INTERNATIONAL TO MINERA EXAR THROUGH EXAR CAPITAL IN 2019 AND RELATED PARTY TRANSACTION

(3) APPLICATION FOR BANK FACILITIES AND PROVISION OF GUARANTEES BY THE COMPANY AND ITS WHOLLY-OWNED SUBSIDIARIES

(4) CAPITAL INCREASE IN WHOLLY-OWNED SUBSIDIARY GFL INTERNATIONAL

(5) INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH SELF-OWNED FUNDS AND

(6) INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH CERTAIN IDLE PROCEEDS

– 1 –

LETTER FROM THE BOARD

I. INTRODUCTION

The purpose of this circular is to provide you with the relevant information for making informed decisions in respect of the resolutions at the EGM in respect of, among other things, (i) amendments to the Articles of Association, (ii) approval of the cap for provision of financial assistance by GFL International to Minera Exar through Exar Capital in 2019 and related party transaction, (iii) application for bank facilities and provision of guarantees by the Company and its wholly-owned subsidiaries, (iv) capital increase in wholly-owned subsidiary GFL International, (v) investment in wealth management products with self-owned funds, and (vi) investment in wealth management products with certain idle proceeds.

II. AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Company intends to make amendments to the Articles of Association as contained in Appendix I to this circular.

The period of validity in relation to lithium hydroxide, lithium fluoride and butyllithium in Article 11 has been amended from March 16, 2018 to March 16, 2021, from December 28, 2018 to December 28, 2021 and from May 17, 2018 to December 25, 2021, respectively; butyllithium (150t/ a) has been changed to butyllithium (500t/a); and the requirements for the shareholders to hold the EGM has been amended from “Shareholders individually or in the aggregate holding more than 10% of the Company’s issued voting Shares request in writing to hold an extraordinary general meeting” to “Shareholders individually or in the aggregate holding 10% or more of the Company’s issued voting Shares request in writing to hold an extraordinary general meeting” in Article 66. The details of the amendments are set out in Appendix I of this circular.

Save as the aforesaid proposed amendments to the Articles of Association, the other provisions of the Articles of Association remain unchanged.

The Hong Kong and PRC legal advisors of the Company have confirmed that the proposed amendments to the Articles of Association comply with the provisions of the Listing Rules and do not violate the applicable laws of the PRC, respectively. The Directors also confirmed that there is nothing unusual about the proposed amendments to the Articles of Association.

– 2 –

LETTER FROM THE BOARD

III. APPROVAL OF THE CAP FOR PROVISION OF FINANCIAL ASSISTANCE BY GFL INTERNATIONAL TO MINERA EXAR THROUGH EXAR CAPITAL IN 2019 AND RELATED PARTY TRANSACTION

A. Overview of provision of external financial assistance

The Resolution on Approval of the Cap for Provision of Financial Assistance by GFL International to Minera Exar through Exar Capital in 2019 and Related Party Transaction(《關於批准全資子公司贛鋒國際通過參股子公司Exar Capital 為參股子公司Minera Exar 提供2019年度財務資助額度暨關聯交易的議案》)was considered and approved at the 29th meeting of the fourth session of the Board convened by the Company on March 7, 2019, pursuant to which, GFL International was approved to provide financial assistance with a cap of no more than US$100 million to Exar Capital BV, a shareholding subsidiary of the Company, (previously known as “Netherlands NHC”; the name finally registered with the Registrar of Companies in Netherlands is “Exar Capital BV”; and hereinafter referred to as “ Exar Capital ”) in 2019. Such financial assistance will be provided to Minera Exar S.A. (a shareholding company of the Company in Argentina, and hereinafter referred to as “ Minera Exar ”) through Exar Capital, and used for promoting the development and construction of Cauchari-Olaroz Lithium Brine Project of Minera Exar.
As Mr. Wang Xiaoshen, the vice chairman and vice president of the Company, serves as a director of Exar Capital; and both Mr. Li Liangbin, the chairman and president of the Company, and Mr. Wang Xiaoshen, the vice chairman and vice president of the Company, serve as directors of Minera Exar, the transaction constitutes a related party transaction but does not constitute a material asset restructuring under the Measures for the Administration of the Material Asset Restructuring of Listed Companies, and is still subject to consideration at the general meeting of the Company.

B. Basic information on the related parties

GFL International is an investment and trading company established by the Company in Hong Kong in 2011. As at the disclosure date of this circular, GFL International has registered capital of US$380,693,200 and RMB50 million. It has not been listed. The Company holds 100% equity interest in GFL International.

Mr. Li Liangbin, the chairman and president of the Company, and Mr. Wang Xiaoshen, the vice chairman and vice president of the Company, serve as directors of GFL International.

– 3 –

LETTER FROM THE BOARD

Lithium Americas Corp. (“ Lithium Americas ”) is a Canada-based resource company and trades on Toronto Stock Exchange under ticker symbol “LAC”. Its registered address is at Suite 1100–355 Burrard Street, Vancouver, British Columbia, Canada, V6C 2G8. As at the disclosure date of this circular, Lithium Americas has 302,534,441 outstanding ordinary shares and is held as to 16.9% by GFL International.

Mr. Wang Xiaoshen, the vice chairman and vice president of the Company, serve as a director of Lithium Americas.

Exar Capital is a mineral investment and trading company in Netherlands. It was established in October 2018 with its registered address at WTC Schiphol Airport, D Tower 11th Floor Schiphol Boulevard 359, 1118 BJ Amsterdam Schiphol, as at the disclosure date of this circular, Exar Capital has not been listed. It is held as to 37.5% and 62.5% by GFL International and Lithium Americas, respectively.

Mr. Wang Xiaoshen, the vice chairman and vice president of the Company, serve as a director of Exar Capital.

Minera Exar is a mining and exploration company in Argentina. It was established in 2006, with its registered address at Palma de 4 Carrillo 54, Planta Baja Of. 7, San Salvador de Jujuy (4600) Argentina. As at the disclosure date of this circular, Minera Exar has not been listed. It is held as to 37.5% and 62.5% by GFL International’s 100% owned subsidiary Ganfeng Lithium Netherlands Co., B.V. (“ Ganfeng Netherlands ”) and Lithium Americas, respectively.

Mr. Li Liangbin, the chairman and president of the Company, and Mr. Wang Xiaoshen, the vice chairman and vice president of the Company, serve as directors of Minera Exar.

Related relationship: Lithium Americas, Exar Capital and Minera Exar are all related legal persons of the Company pursuant to the relevant rules of the PRC. However, none of Lithium Americas, Exar Capital and Minera Exar is a connected person of the Company under Chapter 14A of the Listing Rules. Therefore, the provision of financial assistance by GFL International to Minera Exar through Exar Capital will not constitute a connected transaction under Chapter 14A of the Listing Rules.

– 4 –

LETTER FROM THE BOARD

The shareholding relationships among all related legal persons are as follows:

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----- Start of picture text -----

16.9%
GFL International Lithium Americas
37.5%
100% 62.5%
Ganfeng Netherlands Exar Capital 62.5%
37.5%
Minera Exar
100%
Cauchari-Olaroz Lithium Brine Project
----- End of picture text -----

C. Basic information on the recipients of the financial assistance

For the basic information on Exar Capital, please refer to “B. Basic information on the related parties” in this section.

As at the disclosure date of this circular, the company has no financial data.

For the basic information on Minera Exar, please refer to “B. Basic information on the related parties” in this section.

Financial data of Minera Exar for the latest year and period.

Unit: US$’000 (Note)

	June 30,	December 31,
Index	2018	2018
	(audited)	(unaudited)
Total assets	85,841	179,885
Net assets	35,089	75,459
	January to
Index	June 2018	2018
	(audited)	(unaudited)
Operating revenue	–	–
Net profit	-934	-911

Note: US$1 = RMB6.70

– 5 –

LETTER FROM THE BOARD

D. Main contents of the financial assistance

Purpose of the financial assistance: the financial assistance to be provided by GFL International to Exar Capital will be completely used to finance the development and construction of the Cauchari-Olaroz Lithium Brine Project of Minera Exar, for which it is proposed to commence the construction of camp, pit and salt pan and the ordering of important equipment from the first quarter of 2019. It is estimated that the total investment will reach approximately US$230 million in 2019, for which GFL International and Lithium Americas will provide financial assistance in proportion to their respective shareholding in Exar Capital. Phase I of the project has a planned annual production capacity of 25,000 tonnes of battery grade lithium carbonate and is scheduled to be put into production in the first half of 2020.
Amount of the financial assistance: In 2019, the cap of financial assistance to be provided by GFL International to Exar Capital is no more than US$100 million. Such financial assistance will be eventually provided to Minera Exar through Exar Capital.
Source of funds: Self-owned funds
Annual interest rate: No interest will be accrued on the loan since the Company will obtain the 77.5% offtake rights for the planned annual production capacity of 25,000 tonnes of battery grade lithium carbonate under the Phase I of Cauchari-Olaroz Lithium Brine Project.
Financial assistance provided by other shareholders to Exar Capital and Minera Exar: Lithium Americas will provide financial assistance on equal terms in proportion to its shareholding in Exar Capital.
Repayment guarantee: Exar Capital and Minera Exar will repay the loan with the operating income of Minera Exar.
Performance of approval procedures for this transaction

The provision of external financial assistance was considered and approved at the 29th meeting of the fourth session of the Board convened on March 7, 2019 with 8 voted for, 0 voted against and 0 abstained from voting. Mr. Li Liangbin and Mr. Wang Xiaoshen, as related directors, abstained from voting, and the matter is subject to consideration at the general meeting of the Company. The convening, holding and voting procedures of the Board meeting are in line with the requirements of laws, regulations and the Articles of Association, and the resolutions passed at the meeting are legal and valid.

– 6 –

LETTER FROM THE BOARD

E. Purpose of the provision of financial assistance, effects thereof on the Company and relevant risks

1. Purpose of the transaction

This transaction aims to facilitate the launch of Cauchari-Olaroz Lithium Brine Project of Minera Exar located in Jujuy, Argentina, which is conducive to the Company’s business development and enhancement of core competitiveness and is in line with the development strategy of upstream and downstream integration of the Company and of the new energy automobile industry of the PRC.

2. Effects of the transaction on the Company

The transaction will result in certain net cash outflow of the Company but will have no material effects on the working capital required for normal operation of the Company. The Company will accelerate the development progress of Cauchari-Olaroz Lithium Brine Project. In addition, the transaction will have positive effects on the future financial situation and operating results of the Company.

3. Risks

If the production schedule of Cauchari-Olaroz Lithium Brine Project does not meet the expectations, there may be operational risks and risks of delay in repayment.

The Board will closely monitor the progress and promptly perform the disclosure obligation. Investors are advised to exercise caution and be aware of the risks involved.

F. Provision of financial assistance to Exar Capital and Minera Exar in the last accounting year

In the last accounting year, the Company did not provide any financial assistance to Exar Capital.

In the last accounting year, GFL International provided a financial assistance of US$27.20 million to Minera Exar through Exar Capital; Ganfeng Netherlands, a wholly-owned subsidiary of the Company, provided a financial assistance of US$25 million to Minera Exar.

– 7 –

LETTER FROM THE BOARD

G. Accumulated amount of external financial assistance provided by the Company and overdue amount

As at the disclosure date of this circular, the external financial assistance provided by the Company in aggregate are as follows:

Provider of	Recipient of
the financial assistance	the financial assistance	Amount
GFL International	LITIO MINERA	No more than US$12 million in total
	International Lithium	No more than US$2 million in total
	Lithium Americas	No more than US$225 million in total
GFL International	Minera Exar	No more than US$27.20 million
(Exar Capital)
Ganfeng Netherlands	Minera Exar	No more than US$25 million
Total		No more than US$291.20 million in
		aggregate

The Company has no overdue financial assistance.

Upon provision of the financial assistance facility in an aggregate amount of no more than US$100 million provided by GFL International through shareholding subsidiary Exar Capital to shareholding subsidiary Minera Exar, the accumulated financial assistance provided by the Company will be no more than US$391.20 million (equivalent to RMB2,621.04 million, converted at the exchange rate against US$ of 6.70), representing 64.92% of the latest audited net assets of the Company.

H. Risk control and opinions of the Board

The Board believes that the external financial assistance is to help promote the production schedule of Cauchari-Olaroz Lithium Brine Project of Minera Exar in Jujuy, Argentina, which is conducive to the Company’s business development and enhancement of core competitiveness, and is in line with the development strategy of upstream and downstream integration of the Company and of the new energy automobile industry of the PRC. The purpose of the loan is clear and the source of repayment is guaranteed without any prejudice to the interests of the Company and all Shareholders, in particular minority Shareholders. The decision-making procedures are legal and valid.

– 8 –

LETTER FROM THE BOARD

I. Prior approval opinions and independent opinions of independent non-executive Directors

1. Prior approval opinions on approval of the cap for provision of financial assistance by GFL International to Minera Exar through Exar Capital in 2019 and related party transaction

The provision of financial assistance by GFL International and Lithium Americas through shareholding subsidiary Exar Capital to shareholding subsidiary Minera Exar in proportion to their respective shareholding is fair, just and open, and has no adverse impact on the Company’s independence or any prejudice to the interests of the Company and all Shareholders, in particular minority Shareholders and is in line with the relevant provisions of CSRC and the SZSE. Therefore, we unanimously agree to table the resolution at the 29th meeting of the fourth session of the Board for consideration, and related Directors shall abstain from voting thereon.

2. Independent opinions on approval of the cap for provision of financial assistance by GFL International to Minera Exar through Exar Capital in 2019 and related party transaction

The financial assistance provided by GFL International and Lithium Americas to Exar Capital in proportion to their respective shareholding is to help promote the production schedule of Cauchari-Olaroz Lithium Brine Project of Minera Exar in Jujuy, Argentina, which is conducive to the Company’s business development and enhancement of core competitiveness, and is in line with the development strategy of upstream and downstream integration of the Company and of the new energy automobile industry of the PRC. The financial assistance was determined after arm’s length negotiation on fair and reasonable conditions. The procedures are in line with relevant provisions and the risk is controllable without any prejudice to the interests of the Company and all Shareholders, in particular minority Shareholders.

Based on independent judgment, we approve the cap for provision of financial assistance by GFL International to Exar Capital and agree to table the resolution at the general meeting of Shareholders of the Company for consideration.

J. Miscellaneous

In the twelve months prior to the disclosure date of this circular, the Company has not temporarily replenished working capital with idle proceeds, changed the use of proceeds into permanent replenishment of working capital, or permanently used excess proceeds to supplement working capital or repay bank loans. Meanwhile, in the twelve months

– 9 –

LETTER FROM THE BOARD

after the provision of the external financial assistance, the Company will not temporarily replenish working capital with idle proceeds, change the purpose of proceeds into permanent replenishment of working capital, or permanently use excess proceeds to supplement working capital or repay bank loans.

K. Opinions of sponsors

The cap for provision of financial assistance by the Company to its shareholding subsidiary and related party transaction was considered and approved at the 29th meeting of the fourth session of the Board and the 19th meeting of the fourth session of the supervisory committee of the Company, and independent Directors have expressed their independent opinions of prior approval and consent thereon. The cap for provision of financial assistance by the Company to its shareholding subsidiary and related party transaction is still subject to consideration at the general meeting of the Company.
The Company is not in the period of utilizing idle proceeds to temporarily replenish working capital. In the twelve months prior to consideration of the resolution by the Board, the Company did not change the use of proceeds into permanent replenishment of working capital or permanently use excess proceeds to supplement working capital or repay bank loans.
As a significant initiative for the realization of the strategy of upstream and downstream integration of the Company, the cap for the proposed provision of financial assistance by the Company to its shareholding subsidiary and related party transaction is conductive to enhancing the Company’s core competitiveness. The decision-making process for the cap for provision of financial assistance by the Company to its shareholding subsidiary and related party transaction is in compliance with relevant laws, regulations and the Articles of Association.

The sponsors have no objection against the cap for provision of financial assistance to the shareholding subsidiary and related party transaction.

L. Listing Rules Implications

The Board is merely proposing a cap for the financial assistance and has not decided on a definite transaction to provide financial assistance at this stage. The Company will comply with the relevant Listing Rules, including Chapter 14 and Chapter 14A when the Company enters into any specific transaction to provide financial assistance.

– 10 –

LETTER FROM THE BOARD

IV. APPLICATION FOR BANK FACILITIES AND PROVISION OF GUARANTEES BY THE COMPANY AND ITS WHOLLY-OWNED SUBSIDIARIES

A. Overview of the guarantee

At the 29th meeting of the fourth session of the Board held on March 7, 2019, the resolution in relation to the Application for Bank Facilities and Provision of Guarantees by the Company and Its Wholly-Owned Subsidiaries(《關於公司及全資子公司申請銀行授信並提供擔保的議案》)was considered and approved. In order to meet the development, production and operational needs of the Company and its wholly-owned subsidiaries, the Company and its wholly-owned subsidiaries were approved to apply to the following cooperative banks for a comprehensive credit line of RMB7,500 million in total, of which a total of RMB4,800 million will be guaranteed by way of joint liability guarantees provided by the Company and its wholly-owned subsidiaries on a reciprocal basis. The details are as follows:

Unit: RMB0’000

Name of applicant	Name of bank	Type of credit facility	Method of guarantee	Line of credit	Term
The Company	The Export-Import Bank of China, Jiangxi Branch	Comprehensive credit facilities	Joint liability guarantees and real estate mortgages provided by the Company and its wholly-owned subsidiaries	400,000	3 years
GFL International
Yichun Ganfeng Lithium Co., Ltd. (宜春贛鋒鋰業有限公司)
Fengxin Ganfeng Lithium Co., Ltd.
Jiangxi Ganfeng Battery Technology Co., Ltd. (江西贛鋒電池科技有限公司)
The Company	Bank of Communications, Jiangxi Branch	Comprehensive credit facilities	Credit guarantee	150,000	2 years
Fengxin Ganfeng Lithium Co., Ltd.			Joint liability guarantee of not more than RMB500 million provided by the Company
Yichun Ganfeng Lithium Co., Ltd.
Jiangxi Ganfeng Battery Technology Co., Ltd.
Jiangxi Ganfeng Inspection Consulting Services Co., Ltd. (江西贛鋒檢測諮詢服務有限公司)

– 11 –

LETTER FROM THE BOARD

			Unit: RMB0’000	Unit: RMB0’000	Unit: RMB0’000
Name of applicant	Name of bank	Type of credit facility	Method of guarantee	Line of credit	Term
The Company	China Citic Bank, Nanchang Branch	Comprehensive credit facilities	Credit guarantee	80,000	1 year
Ningdu Ganfeng Lithium Co., Ltd. (寧都縣贛鋒鋰業有限公司)			Joint liability guarantee of not more than RMB300 million provided by the Company
Jiangxi Ganfeng Battery Technology Co., Ltd.
The Company	Bank of Jiujiang, Xinyu Branch	Comprehensive credit facilities	Credit guarantee	50,000	1 year
The Company	Bank of China, Xinyu Branch	Comprehensive credit facilities	Credit guarantee	70,000	1 year
Total				750,000

The Company and its subsidiaries are exempt from paying guarantee fees or providing counter-guarantees in respect of the above guarantees.

The management of the Company is hereby authorized to handle relevant formalities and sign relevant legal documents on behalf of the Company within the line of credit facilities as approved by the resolution. This matter is subject to the consideration and approval at the general meeting of the Company.

As at the date of this circular, no agreement has been entered into in respect of the above guarantees.

B. Basic information on the guaranteed party

(I) the Company

The Company was established on March 2, 2000 with a registered capital of RMB1,315,081,202 under the unified social credit code of 91360500716575125F at the address of Longteng Road, Economic Development Zone in Xinyu, Jiangxi Province. LI Liangbin is the legal representative of the Company. The Company is principally engaged in: the production of lithium hydroxide, lithium carbonate, lithium fluoride and butyl lithium; the production, processing and sales of non-ferrous metals, batteries, instrumentation components, machinery and equipment, chemical products, chemical raw materials and chemical products.

– 12 –

LETTER FROM THE BOARD

Below is the financial data of the Company for the year ended December 31, 2017 and the nine months ended September 30, 2018:

Unit: RMB0’000

	As at	As at
	December 31,	September 30,
	2017	2018
Item	(Audited)	(Unaudited)
Total assets	799,910.00	893,100.30
Net assets	403,720.44	491,625.02
		First three
		quarters of
	2017	2018
Item	(Audited)	(Unaudited)
Operating revenue	438,344.61	359,350.11
Net profit attributable to Shareholders
of the Company after deducting non-
recurring profit and loss	119,414.44	97,021.39

As at September 30, 2018, the gearing ratio of the Company was 44.95%.

(II) Jiangxi Ganfeng Battery Technology Co., Ltd.

Jiangxi Ganfeng Battery Technology Co., Ltd. is a wholly-owned subsidiary of the Company established on June 13, 2011 with a registered capital of RMB500 million under the unified social credit code of 91360500576129026E at the address of Sunshine Avenue, High and New Technology Zone in Xinyu, Jiangxi Province. SHEN Haibo (沈海博) is the legal representative of the company. The company is principally engaged in the research and development, production and sales of lithium batteries, power management system and other serial products.

– 13 –

LETTER FROM THE BOARD

Below is the financial data of Jiangxi Ganfeng Battery Technology Co., Ltd. for the year ended December 31, 2017 and the nine months ended September 30, 2018:

Unit: RMB0’000

	As at	As at
	December 31,	September 30,
	2017	2018
Item	(Audited)	(Unaudited)
Total assets	28,639.84	71,006.82
Net assets	11,596.79	53,580.79
		First three
		quarters of
	2017	2018
Item	(Audited)	(Unaudited)
Operating revenue	10,924.94	11,385.96
Net profit	-1,120.66	-1,426.5

As at September 30, 2018, the gearing ratio of Jiangxi Ganfeng Battery Technology Co., Ltd. was 24.54%.

(III) Fengxin Ganfeng Lithium Co., Ltd.

Fengxin Ganfeng Lithium Co., Ltd. is a wholly-owned subsidiary of the Company established on January 8, 2004 with a registered capital of RMB135 million under the unified social credit code of 9136092175677003XG at the address of Fengtian Development Zone in Fengxin County. ZHU Shigui (朱實貴) is the legal representative of the company. The company is principally engaged in the production and sales of lithium metal.

– 14 –

LETTER FROM THE BOARD

Below is the financial data of Fengxin Ganfeng Lithium Co., Ltd. for the year ended December 31, 2017 and the nine months ended September 30, 2018:

Unit: RMB0’000

	As at	As at
	December 31,	September 30,
	2017	2018
Item	(Audited)	(Unaudited)
Total assets	45,684.07	55,090.02
Net assets	33,021.13	41,656.65
		First three
		quarters of
	2017	2018
Item	(Audited)	(Unaudited)
Operating revenue	70,285.91	50,115.21
Net profit	14,337.48	8,432.42

As at September 30, 2018, the gearing ratio of Fengxin Ganfeng Lithium Co., Ltd. was 24.38%.

(IV) Yichun Ganfeng Lithium Co., Ltd.

Yichun Ganfeng Lithium Co., Ltd. is a wholly-owned subsidiary of the Company established on July 22, 2008 with a registered capital of RMB50 million at the address of the Economic Development Zone in Yichun, Jiangxi Province under the unified social credit code of 91360900677954594R. ZHU Shigui (朱實貴) is the legal representative of the company. The company is principally engaged in the production and sales of lithium, rubidium, cesium, materials for lithium batteries and other serial products.

– 15 –

LETTER FROM THE BOARD

Below is the financial data of Yichun Ganfeng Lithium Co., Ltd. for the year ended December 31, 2017 and the nine months ended September 30, 2018:

Unit: RMB0’000

	As at	As at
	December 31,	September 30,
	2017	2018
Item	(Audited)	(Unaudited)
Total assets	40,470.27	45,849.19
Net assets	32,192.76	42,058.05
		First three
		quarters of
	2017	2018
Item	(Audited)	(Unaudited)
Operating revenue	38,577.41	43,097.01
Net profit	9,192.17	9,761.73

As at September 30, 2018, the gearing ratio of Yichun Ganfeng Lithium Co., Ltd. was 8.27%.

(V) Jiangxi Ganfeng Inspection Consulting Services Co., Ltd.

Jiangxi Ganfeng Inspection Consulting Services Co., Ltd. is a whollyowned subsidiary of the Company established on April 11, 2007 with a registered capital of RMB5 million under the unified social credit code of 91360500799475348N at the address of the Economic Development Zone in Xinyu. ZHANG Baoxiu (章保秀) is the legal representative of the company. The company is principally engaged in the provision of public security testing services and other testing services.

– 16 –

LETTER FROM THE BOARD

Below is the financial data of Jiangxi Ganfeng Inspection Consulting Services Co., Ltd. for the year ended December 31, 2017 and the nine months ended September 30, 2018:

Unit: RMB0’000

	As at	As at
	December 31,	September 30,
	2017	2018
Item	(Audited)	(Unaudited)
Total assets	1,335.41	1,295.74
Net assets	1,065.27	1,051.53
		First three
		quarters of
	2017	2018
Item	(Audited)	(Unaudited)
Operating revenue	212.76	205.91
Net profit	32.17	-13.74

As at September 30, 2018, the gearing ratio of Jiangxi Ganfeng Inspection Consulting Services Co., Ltd. was 18.85%.

(VI) Ningdu Ganfeng Lithium Co., Ltd.

Ningdu Ganfeng Lithium Co., Ltd. is a wholly-owned subsidiary of the Company established on August 23, 2016 with a registered capital of RMB400 million under the unified social credit code of 91360730MA35K7X05F at the address of the Industrial Park of Ningdu County, Ganzhou. ZENG Zuliang (曾祖亮) is the legal representative of the company. The company is principally engaged in the production, processing and sales of battery-grade lithium carbonate.

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LETTER FROM THE BOARD

Below is the financial data of Ningdu Ganfeng Lithium Co., Ltd. for the year ended December 31, 2017 and the nine months ended September 30, 2018:

Unit: RMB0’000

	As at	As at
	December 31,	September 30,
	2017	2018
Item	(Audited)	(Unaudited)
Total assets	11,626.39	45,447.62
Net assets	-59.67	38,815.98
		First three
		quarters of
	2017	2018
Item	(Audited)	(Unaudited)
Operating revenue	0	0
Net profit	-59.58	-124.35

As at September 30, 2018, the gearing ratio of Ningdu Ganfeng Lithium Co., Ltd. was 14.59%.

(VII) GFL International

Basic Information on GFL International

Company name:	GFL International Co., Limited
Place of incorporation:	Hong Kong
Scope of business:	Investment and trading (minerals, etc.)
Number of certificate of incorporation:	1580183
Business registration number:	5814941200003117

– 18 –

LETTER FROM THE BOARD

Below is the financial data of GFL International for the year ended December 31, 2017 and the nine months ended September 30, 2018:

Unit: RMB0’000

	As at	As at
	December 31,	September 30,
	2017	2018
Item	(Audited)	(Unaudited)
Total assets	191,659.59	190,628.25
Net assets	154,784.83	174,620.49
		First three
		quarters of
	2017	2018
Item	(Audited)	(Unaudited)
Operating revenue	97,418.23	79,957.78
Net profit	15,658.49	20,507.58

As at September 30, 2018, the gearing ratio of GFL International was 8.40%.

C. Opinions of the Board

In order to meet the capital requirements of the Company and its wholly-owned subsidiaries and optimize their financial structures, the Company and its wholly-owned subsidiaries secure bank facilities by way of provision of cross guarantees. This is conducive to the development and production and operational needs of the Company and its wholly-owned subsidiaries, satisfaction of the financing requirements of the Company, and the long-term development of the Company without prejudice to the interests of the Company and the minority Shareholders.

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LETTER FROM THE BOARD

D. Accumulative amount of external guarantees and amount of overdue guarantees

As at the date of this circular, the guarantees provided by the Company and its subsidiaries only refer to those between the Company and its subsidiaries whose financial results were consolidated into the consolidated financial statements of the Group. The accumulative amount of external guarantees approved and used by the Company is as follows:

Unit: RMB0’000

Guarantees approved and used Guarantor Guaranteed party Amount Percentage of the latest audited net assets of the Company The Company Fengxin Ganfeng Lithium Co., Ltd. 5,000 1.24% Yichun Ganfeng Lithium Co., Ltd 10,000 2.48% Jiangxi Ganfeng Battery Technology Co., Ltd. 24,000 5.94% Jiangxi Ganfeng Inspection Consulting Services Co., Ltd. 1,000 0.25% Ningdu Ganfeng Lithium Co., Ltd. 10,000 2.48% GFL International US$15 million 2.49% Fengxin Ganfeng Lithium Co., Ltd. The Company 50,000 12.38% Total 110,050 (note) 27.26% Note: US$1 = RMB6.70	Guarantees actually incurred Amount Percentage of the latest audited net assets of the Company 0 – 0 – 0 – 0 – 0 – 0 – 50,000 12.38% 50,000 12.38%	Guarantees actually incurred Amount Percentage of the latest audited net assets of the Company 0 – 0 – 0 – 0 – 0 – 0 – 50,000 12.38% 50,000 12.38%
		12.38%

The Company is not involved in any overdue guarantee or guarantee litigation.

– 20 –

LETTER FROM THE BOARD

After the provision of joint liability guarantees of RMB4,800 million in total by the Company and its subsidiaries has been considered and approved, the accumulative amount of valid external guarantees approved and provided by the Company (including cross guarantees between the Company and its subsidiaries) will be RMB4,800 million and US$15 million (together equivalent to RMB4,900.5 million), representing 121.38% of the latest audited net assets of the Company, with the details as follows:

Unit: RMB0’000

Guarantor Guaranteed party Joint liability guarantees and real estate mortgages provided by the Company and its wholly-owned subsidiaries The Company and its wholly-owned subsidiaries The Company Wholly-owned subsidiaries of the Company The Company Wholly-owned subsidiaries of the Company The Company GFL International Total	Valid guarantees approved by the Company Amount Percentage of the latest audited net assets of the Company 400,000 99.08% 50,000 12.38% 30,000 7.43% US$15 million 2.49% 490,050 (note) 121.38%	Guarantees actually incurred Amount Percentage of the latest audited net assets of the Company 50,000 12.38% The remaining portion will be utilized according to the business development needs of the companies. – These will be utilized according to the business development needs of the companies. – 50,000 12.38%	Guarantees actually incurred Amount Percentage of the latest audited net assets of the Company 50,000 12.38% The remaining portion will be utilized according to the business development needs of the companies. – These will be utilized according to the business development needs of the companies. – 50,000 12.38%
			12.38%

Note: US$1 = RMB6.70

– 21 –

LETTER FROM THE BOARD

V. CAPITAL INCREASE IN WHOLLY-OWNED SUBSIDIARY GFL INTERNATIONAL

A. Overview of external investment

At the 29th meeting of the fourth Board held on March 7, 2019, the Resolution Regarding Capital Increase in wholly-owned subsidiary GFL International(《關於對全資子公司贛鋒國際增資的議案》)was considered and approved, pursuant to which the Company was approved to inject additional capital of US$500 million out of its own funds to GFL International so as to meet the needs of the Company’s development, fully leverage the advantages of GFL International and thus enable the Company to grow bigger and stronger. The registered capital of GFL International currently comprises US$380,693,200 and RMB50,000,000 and will be changed to US$880,693,200 and RMB50,000,000 upon completion of the capital increase, 100% owned by the Company.

Pursuant to the Shenzhen Listing Rules and the Articles of Association, the investment mentioned above is deemed as a capital increase in a wholly-owned subsidiary and does not constitute a related-party transaction, nor does it constitute a material asset reorganization under the Administrative Measures for Material Asset Reorganizations of Listed Companies. However, the capital increase is subject to Shareholders’ consideration and approval at general meeting of the Company.

B. Basic information on GFL International

Company name:	GFL International Co., Limited
Place of incorporation:	Hong Kong
Scope of business:	Investment and trading (minerals, etc.)
Number of certificate of incorporation:	1580183
Business registration number:	5814941200003117

Upon completion of the capital increase, the registered capital of GFL International will be increased from US$380,693,200 and RMB50,000,000 to US$880,693,200 and RMB50,000,000, 100% owned by the Company.

C. Purpose of the capital increase and its impact on the Company

The capital increase aims to expand the business of GFL International and ensure adequate funding required for the external investment activities of GFL International. The capital increase will not change the proportion of the Company’s shareholding in GFL International, nor will it have any material impact on the future financial position or operating results of the Company.

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LETTER FROM THE BOARD

D. Risk warning

GFL International, set up by the Company to invest and trade outside mainland China, operates in Hong Kong where the legal and policy systems, business environment and cultural characteristics are quite different from those of mainland China. The Company will procure GFL International to carry on business in accordance with the laws and business rules of Hong Kong and perform internal audit on GFL International from time to time to further reduce business risks.

VI. INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH SELF-OWNED FUNDS

A. Background

At the 29th meeting of the fourth session of the Board held on March 7, 2019, the Resolution in Relation to Investment in Wealth Management Products with Self-owned Funds(《關於使用自有資金投資理財產品的議案》)was considered and approved, pursuant to which the Company and its subsidiaries covered within the scope of the consolidated statements of the Company were approved to invest in wealth management products with high security, strong liquidity and guaranteed principal with self-owned funds of not more than RMB500 million in order to improve the utilisation efficiency of self-owned funds provided that the normal operation, production and construction of the Company would not be affected. Such funds 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:

B. Overview of the investment

1. Purpose of the investment

To improve the utilisation efficiency of self-owned funds of the Company and increase the Company’s gain on investment provided that the normal operation, production and construction of the Company would not be affected.

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LETTER FROM THE BOARD

2. Investment amount

The amount of funds to be used shall not exceed RMB500 million. Within such limit, the funds can be used on a rolling basis, and the balance of self-owned funds to be invested shall not exceed RMB500 million at any time. The actual amount to be used for purchase of wealth management products shall be subject to adjustments based on the actual status of the Company’s self-owned funds.

3. Investment categories

The categories to be invested in shall be short-term wealth management products with low risk, fixed income or guaranteed principal, the issuers of which are commercial banks and other financial 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(《深圳證券交易所中小企業板上市公司規範運作指引》).

4. Investment term

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

5. Sources of funds

The investment shall be financed by the self-owned funds of the Company.

6. Implementation method

The chairman of the Board 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.

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LETTER FROM THE BOARD

C. Impact on the daily operation of the Company

The purchase of short-term principal-guaranteed wealth management products by the Company with self-owned funds are made on the premise that the necessary funds for the production and operation of the Company are guaranteed and the self-owned funds are secured. Therefore, neither the turnover of daily working capital nor the normal development of the principal business of the Company will be affected.
Appropriate investment in short-term principal-guaranteed wealth management products enables the Company to reap certain investment benefits and further enhance its overall performance, thereby generating greater returns on investment for the Shareholders of the Company.

D. 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 will invest according to the economic situation and changes in the financial market in a timely and appropriate manner, but does not rule out that the investment may be affected by market fluctuations.

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

(1) The specific investments shall be made by the management after being approved by the chairman of the Board 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 after assessment, corresponding measures will be taken immediately to control investment risks.
(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, urging the finance department into dealing with relevant accounts in a timely manner and conducting verification on the accounting treatment.

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LETTER FROM THE BOARD

(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.
(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.

E. Impact on the Company

The Company’s investment in principal-guaranteed wealth management products with self-owned funds aims to improve the capital utilisation efficiency of the Company and increase the income from cash assets. As such investment is made on the premise without influence to the utilisation of working capital for its daily operations, the normal development of the Company’s principal business will not be affected.
Timely cash management of the temporarily idle self-owned funds 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.

F. Opinions of the board of supervisors

The Company’s investment in principal-guaranteed wealth management products with selfowned funds aims to improve capital utilisation efficiency of the Company and increase the income from cash assets. As such investment is made on the premise without influence to the utilisation of working capital for its daily operations, it will neither affect the normal development of the Company’s principal business, nor do harm to the interests of the Company and its Shareholders as a whole, especially the minority Shareholders. In view of the above, we agree on the Company’s investment in wealth management products with high security, strong liquidity and guaranteed principal with self-owned funds of not more than RMB500 million.

G. Listing Rules Implications

The Board is merely proposing a cap for the investment and does not have any plan to enter into a specific transaction at this stage. The Company will comply with the relevant Listing Rules, including Chapter 14 and Chapter 14A when the Company enters into any specific transaction.

– 26 –

LETTER FROM THE BOARD

VII. INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH CERTAIN IDLE PROCEEDS

A. Background

At the 29th meeting of the fourth session of the Board held on March 7, 2019, the Resolution in Relation to Investment in Wealth Management Products with Certain Idle Proceeds(《關於使用部分閒置資金投資理財產品的議案》)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:

B. 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 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 Corporation Limited, 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 wholly-owned subsidiary of the Company, all being special accounts designated by the Company for depositing proceeds.

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LETTER FROM THE BOARD

After deducting the underwriting and sponsorship fees of RMB10,000,000.00 paid to the joint lead underwriters, PING AN Securities Corporation Limited 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(立信會計師事務所（特殊普通合夥))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 Overseaslisted 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).

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LETTER FROM THE BOARD

C. 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 1 Power battery project of high capacity lithium-ion with an annual output of 600 million watt hours 2 Battery-grade lithium carbonate construction project with an annual output of 15,000 tons 3 Lithium hydroxide mono-hydrate project with an annual output of 20,000 tons Total	Committed investment amount of the proceeds (RMB0’000) 28,800.00 33,800.00 30,200.00 92,800.00	Accumulative investment amount of the proceeds as at December 31, 2018 (RMB0’000) Note 28,812.21 8,567.28 28,678.82 66,058.31	Balance of proceeds as at December 31, 2018 (RMB0’000) Note 0 26,250.61 1,551.48
			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.

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LETTER FROM THE BOARD

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	Accumulative
	net proceeds	investment amount of	Balance of
	expressed in	the proceeds as at	proceeds as at
No.	US$ equivalents	December 31, 2018	December 31, 2018
	(US$0’000)	(US$0’000)	(US$0’000)
1	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

D. Information on the investment in wealth management products with certain idle proceeds

In line with the principle of maximizing the Shareholders’ interests, the Company 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.

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LETTER FROM THE BOARD

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 in 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 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 SZSE 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

6. Information disclosure

The Company shall file with the SZSE 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 the interim report and annual report.

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LETTER FROM THE BOARD

E. 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 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.

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

(1) The specific investments shall be made by the management after being approved by the chairman of the Board 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.
(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.
(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.

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.

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LETTER FROM THE BOARD

F. 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.

G. Opinions of independent non-executive 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 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.

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LETTER FROM THE BOARD

H. 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.

I. 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 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 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 Corporation Limited holds no objection against the investment in wealth management products by the Company with certain idle proceeds from public issuance of convertible bonds.

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LETTER FROM THE BOARD

(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 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 Corporation Limited holds no objection against the investment in wealth management products by the Company with idle proceeds from issuance of H Shares.

J. Listing Rules Implications

VIII. EGM

The proposed resolutions regarding (i) amendments to the Articles of Association, (ii) approval of the cap for provision of financial assistance by GFL International to Minera Exar through Exar Capital in 2019 and related party transaction, and (iii) application for bank facilities and provision of guarantees by the company and its wholly-owned subsidiaries are subject to the approval by way of special resolutions of Shareholders at the EGM pursuant to the Articles of Association, which must be passed by two-thirds or more than two-thirds of the total number of shares with valid voting rights held by Shareholders attending the meeting.

The proposed resolutions regarding (iv) capital increase in wholly-owned subsidiary GFL International, (v) investment in wealth management products with self-owned funds, and (vi) investment in wealth management products with certain idle proceeds are subject to the approval by way of ordinary resolutions of Shareholders at the EGM pursuant to the Articles of Association.

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LETTER FROM THE BOARD

According to the requirements of Rules for the General Assemblies of Shareholders of Listed Companies (Revised in 2016)(《上市公司股東大會規則(2016年修訂)》)and Guidelines of the Shenzhen Stock Exchange for Standardised Operation of Companies Listed on the Small and Medium-sized Enterprise Board (Revised in 2015)(《深圳證券交易所中小企業板上市公司規範運作指引(2015年修訂)》), votes of small and medium investors in proposal (i), (ii) and (iii) will be counted separately, and the results of the separate counting will be disclosed in the announcement on the resolutions of this general meeting. Small and medium-sized investors refer to Shareholders other than the Company’s Directors, supervisors, senior management and Shareholders who individually or collectively hold more than 5% of the Company’s Shares.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Shareholders is required to abstain from voting at the general meeting under the Hong Kong Listing Rules.

(i) A notice convening the EGM to be held at the conference room of the Company at 4th Floor, R&D Building at the Company’s Headquarter, Longteng Road, Economic Development Zone, Xinyu, Jiangxi Province, the PRC on Tuesday, April 23, 2019 at 2:00 p.m.; and (ii) the proxy form for use at and the reply slip in relation to the EGM were despatched by the Company on Wednesday, March 7, 2019 and also published and available for downloading on the websites of The Stock Exchange of Hong Kong Limited at www.hkexnews.com.hk and of the Company at www.ganfenglithium.com. As disclosed in the meeting notice, for the purpose of determining the H Shareholders entitled to attend and vote at the EGM, the register of members of the H Shares of the Company has been scheduled to close from Saturday, March 23, 2019 to Tuesday, April 23, 2019 (both days inclusive), during which period no transfer of H Share will be registered. Shareholders whose names appear on the register of members of the H Shares of the Company kept with the Computershare Hong Kong Investor Services Limited at 4:30 p.m. on Friday, March 22, 2019 are entitled to attend the EGM. Whether or not you intend to attend the EGM, we encourage you to complete and return the proxy form in respect of the EGM in accordance with the instructions printed thereon as soon as possible and in any event not less than 24 hours prior to the commencement of the EGM (or any adjournments thereof). Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case may be) should you so wish. Shareholders who intend to attend the EGM should also complete and return the reply slip in accordance with the instructions printed thereon.

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LETTER FROM THE BOARD

IX. VOTING BY WAY OF POLL

The votes of the Shareholders at the EGM will be taken by poll in accordance with Rule 13.39(4) of the Listing Rules and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules. To the best knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Shareholders is required to abstain from voting at the general meeting under the Hong Kong Listing Rules. To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, there is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon any Shareholder; and (ii) no obligation or entitlement of any Shareholder as at the Latest Practicable Date, whereby he/she has or may have temporarily or permanently passed control over the exercise of the voting right in respect of his/her Shares to a third party, either generally or on a case-by-case basis. Accordingly, to the best knowledge, information and belief of the Directors, there exists no discrepancy between any Shareholder ’s beneficial shareholding interest in the Company and the number of Shares in respect of which such Shareholder will control or will be entitled to exercise control over the voting right at the EGM.

X. RECOMMENDATION

The Board considers that the proposed resolutions set out above are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends that Shareholders eligible to vote at the EGM to attend and vote in favour of the resolutions.

XI. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

Yours faithfully

For and on behalf of the Board GANFENG LITHIUM CO., LTD. LI Liangbin

Chairman

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AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

AMENDMENTS TO THE ARTICLES OF ASSOCIATION COMPARISON TABLE

No. Original version Revised version 1 Article 11 Article 11 ⋯⋯ ⋯⋯ The Company’s business scope: Production The Company’s business scope: Production of of lithium hydroxide (11kt/a) (valid until lithium hydroxide (11kt/a) ( valid until March March 16, 2018); lithium fluoride (1500t/a) 16, 2021 ); lithium fluoride (1500t/a) ( valid (valid until December 28, 2018); butyllithium until December 28, 2021 ); butyllithium ( 500 t/ (150t/a) (valid until May 17, 2018); sales a) ( valid until December 25, 2021 ); sales of butyllithium, chlorobutane, cyclohexane, of butyllithium, chlorobutane, cyclohexane, metallic lithium, lithium hydroxide, lithium metallic lithium, lithium hydroxide, lithium fluoride, lithium hydride, lithium oxide, fluoride, lithium hydride, lithium oxide, lithium aluminum hydride, lithium silicon lithium aluminum hydride, lithium silicon alloy, lithium aluminum alloy, sulfuric acid, alloy, lithium aluminum alloy, sulfuric acid, hydrochloric acid (valid until December 19, hydrochloric acid (valid until December 19, 2019); sales of non-ferrous metals, batteries, 2019); sales of non-ferrous metals, batteries, battery materials, instrumentation spare battery materials, instrumentation spare parts, machinery and equipment, production, parts, machinery and equipment, production, processing and sales of chemical products, processing and sales of chemical products, chemical materials and chemicals (excluding chemical materials and chemicals (excluding hazardous chemicals and precursor chemicals; hazardous chemicals and precursor chemicals; research and experimental development, research and experimental development, technology promotion services, new energy technology promotion services, new energy research and development; import and export research and development; import and export of goods and technologies (operation subject of goods and technologies (operation subject to licenses); capital investment services and to licenses); capital investment services and investment consulting services. (operational investment consulting services. (operational activities in connection with the items subject activities in connection with the items subject to approval according to the law may only be to approval according to the law may only be carried out after approved by the competent carried out after approved by the competent authorities). authorities) ⋯⋯ ⋯⋯

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AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

No.	Original version	Revised version
2	Article 66 ⋯⋯ (iii) Shareholders individually or in the aggregate holding more than 10% of the Company’s issued voting Shares request in writing to hold an extraordinary general meeting; ⋯⋯	Article 66 ⋯⋯ (iii) Shareholders individually or in the aggregate holding10% or moreof the Company’s issued voting Shares request in writing to hold an extraordinary general meeting; ⋯⋯

For and on behalf of the Board

GANFENG LITHIUM CO., LTD.

March 7, 2019

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AI assistant

Ganfeng Lithium Group Co., Ltd. — Proxy Solicitation & Information Statement 2019

50157_rns_2019-03-07_6916617d-39e4-4fd9-b3b5-9fdfb5b43627.pdf

(1) AMENDMENTS TO THE ARTICLES OF ASSOCIATION

AND

(6) INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH CERTAIN IDLE PROCEEDS

DEFINITIONS

Executive Directors:

Principal Place of

I. INTRODUCTION

II. AMENDMENTS TO THE ARTICLES OF ASSOCIATION

A. Overview of provision of external financial assistance

B. Basic information on the related parties

LETTER FROM THE BOARD

C. Basic information on the recipients of the financial assistance

D. Main contents of the financial assistance

E. Purpose of the provision of financial assistance, effects thereof on the Company and relevant risks

1. Purpose of the transaction

2. Effects of the transaction on the Company

3. Risks

F. Provision of financial assistance to Exar Capital and Minera Exar in the last accounting year

H. Risk control and opinions of the Board

J. Miscellaneous

K. Opinions of sponsors

L. Listing Rules Implications

IV. APPLICATION FOR BANK FACILITIES AND PROVISION OF GUARANTEES BY THE COMPANY AND ITS WHOLLY-OWNED SUBSIDIARIES

A. Overview of the guarantee

B. Basic information on the guaranteed party

(I) the Company

LETTER FROM THE BOARD

(II) Jiangxi Ganfeng Battery Technology Co., Ltd.

LETTER FROM THE BOARD

(III) Fengxin Ganfeng Lithium Co., Ltd.

LETTER FROM THE BOARD

(IV) Yichun Ganfeng Lithium Co., Ltd.

LETTER FROM THE BOARD

(V) Jiangxi Ganfeng Inspection Consulting Services Co., Ltd.

LETTER FROM THE BOARD

(VI) Ningdu Ganfeng Lithium Co., Ltd.

(VII) GFL International

LETTER FROM THE BOARD

C. Opinions of the Board

D. Accumulative amount of external guarantees and amount of overdue guarantees

LETTER FROM THE BOARD

V. CAPITAL INCREASE IN WHOLLY-OWNED SUBSIDIARY GFL INTERNATIONAL

A. Overview of external investment

B. Basic information on GFL International

C. Purpose of the capital increase and its impact on the Company

D. Risk warning

VI. INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH SELF-OWNED FUNDS

A. Background

B. Overview of the investment

1. Purpose of the investment

2. Investment amount

3. Investment categories

4. Investment term

5. Sources of funds

6. Implementation method

C. Impact on the daily operation of the Company

D. Investment risks and risk control

1. Investment risks

E. Impact on the Company

F. Opinions of the board of supervisors

G. Listing Rules Implications

VII. INVESTMENT IN WEALTH MANAGEMENT PRODUCTS WITH CERTAIN IDLE PROCEEDS

A. Background

B. Basic information on the proceeds

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

LETTER FROM THE BOARD

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

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

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

D. Information on the investment in wealth management products with certain idle proceeds

1. Purpose of the investment

2. Investment amount

3. Investment categories

4. Validity period

5. Implementation method

6. Information disclosure

E. Investment risks and risk control

Ganfeng Lithium Group Co., Ltd. Proxy Solicitation & Information Statement 2019