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 Lygend Resources & Technology Co., Ltd., you should at once hand this circular to the purchaser or the 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 the 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.

This circular appears for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

力勤资源

LYGEND RESOURCES

Lygend Resources & Technology Co., Ltd.

宁波力勤资源科技股份有限公司

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

(Stock Code: 2245)

(1) MAJOR AND CONNECTED TRANSACTIONS IN RELATION TO THE JV COMPANIES
(2) CONNECTED TRANSACTIONS IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE TO A CONNECTED SUBSIDIARY AND RECEIPT OF FINANCIAL ASSISTANCE FROM A CONNECTED PERSON AND
(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

中毅资本有限公司

Grand Moore Capital Limited

Capitalized terms used in this cover page have the same meanings as those defined in the section headed "Definitions" in this circular.

A letter from the Board is set out on pages 11 to 39 of this circular. The notice convening the EGM of the Company to be held on Monday, 13 January 2025 at 10:00 am at 10/F, Building C10, R&D Park, Lane 299, Guanghua Road, Yinzhou District, Ningbo City, Zhejiang Province, PRC is set out on pages 83 to 85 of this circular.

A form of proxy for use by the Shareholders at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions published thereon and deposit the same with the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not less than 24 hours before the time appointed for holding the EGM (or any adjournment thereof). Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM (or any adjournment thereof) should you so wish. For the avoidance of doubt, holders of Treasury Shares, if any, shall abstain from voting at the Company's general meeting.

26 December 2024

CONTENTS

Page

Definitions 1

Letter from the Board 11

Letter from the Independent Board Committee 40

Letter from the Independent Financial Adviser 42

Appendix I - Financial Information of the Group 70

Appendix II - General Information 74

Notice of Extraordinary General Meeting 83

DEFINITIONS

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

"Articles of Association"
the articles of association of the Company adopted on 31 December 2021, as amended from time to time

"associate(s)"
has the meaning ascribed to it under the Listing Rules

"Bank"
PT Bank OCBC NISP Tbk, a limited liability company established under the laws of Indonesia, whose shares are listed on the Indonesian Stock Exchange (stock code: NISP). It is licensed and supervised by the Indonesian Financial Services Authority and Bank Indonesia

"Baoxin Special Steel"
Ningbo Baoxin Special Steel Technology Co., Ltd.* (寧波寶鑫特鋼科技有限公司), a company established in the PRC with limited liability and a wholly-owned subsidiary of the Company

"BBS"
PT Bhakti Bumi Sentosa (or such other name as may be agreed by the contracting parties under the BBS Shareholders Agreement), a limited liability company to be established under the laws of Indonesia

"BBS Board of Commissioners"
board of commissioners of BBS

"BBS Board of Directors"
board of directors of BBS

"BBS General Meeting(s)"
the general meetings of BBS

"BBS Shareholders"
holder(s) of the share(s) of BBS from time to time

"BBS Shareholders Agreement"
the shareholders' agreement entered into between HBW and HPL on 28 October 2024 in relation to, among others, the establishment of BBS

"BBS Shares"
share(s) of BBS

"Board" or "Board of Directors"
the board of Directors

DEFINITIONS

"CKM Shareholders Agreement" the shareholders' agreement entered into between HBW and TBP on 17 May 2024 in relation to, among other things, the shareholding structure of shareholders as well as the composition of the board of directors and board of commissioners of PT Cipta Kemakmuran Mitra, a limited liability company established under the laws of Indonesia on 17 June 2024. For further details, please refer to the announcement of the Company dated 17 June 2024

"Company" Lygend Resources & Technology Co., Ltd. (宁波力勤资源科技股份有限公司), a joint stock company incorporated in the PRC with limited liability, the H Shares of which are listed on the Stock Exchange (Stock Code: 2245)

"Connected JV Agreements" the DCM Shareholders Agreement, the ONC Amendment Agreement and the BBS Shareholders Agreement

"connected person(s)" has the meaning ascribed to it under the Listing Rules

"connected subsidiary(ies)" has the meaning ascribed to it under the Listing Rules

"controlling shareholder(s)" has the meaning ascribed to it under the Listing Rules

"DCM" PT Dharma Cipta Mulia, a limited liability company established under the laws of Indonesia and indirectly held as to 60% by the Company and a connected subsidiary of the Company

"DCM Board of Commissioners" board of commissioners of DCM

"DCM Board of Directors" board of directors of DCM

"DCM General Meeting(s)" the general meetings of DCM

"DCM Shareholders" holder(s) of the share(s) of DCM from time to time

"DCM Shareholders Agreement" the shareholders' agreement entered into between Ningbo Lygend IPM and TBP on 28 October 2024 in relation to, among others, the increase in capital commitment to DCM

"DCM Shares" share(s) of DCM

DEFINITIONS

"Debt"
any loans, borrowings, or indebtedness (together with any accrued interest)

"Deed of Guarantee"
the deed of corporate guarantee, indemnity and undertaking entered into between HPL (as guarantor) and the Bank (as security agent) on 10 December 2024, in relation to, among other things, the provision of a guarantee by HPL in favour of the Bank in respect of the Secured Liabilities

"Director(s)"
the director(s) of the Company

"Effective Time"
the time at and day on which HPL (as guarantor under the Deed of Guarantee), Baoxin Special Steel (as pledgor under the NBSS Share Pledge) and KPS (as the subject company under the TBP Share Pledge) deliver to the Bank written confirmation and evidence that the necessary shareholder resolutions have been passed at the EGM approving the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge, respectively, and the transactions contemplated thereunder

"EGM"
the extraordinary general meeting to be held by the Company on Monday, 13 January 2025 to consider and, if through fit, approve, confirm and ratify among other things, the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder

"Employee Incentive Platforms"
Ningbo Litai, Ningbo Yangcheng, Ningbo Xinpan and Ningbo Yufeng, which are each shareholders of the Company

"Encumbrance"
any interest or equity of any person (including without prejudice to the generality of the foregoing, any right to acquire an option or right of pre-emption) or any mortgage, charge, pledge, lien or assignment or any other encumbrance, priority or security interest or arrangement of whatsoever nature over or in the relevant property

– 3 –

DEFINITIONS

"Facility Agreement"
the facility agreement entered between, among others, KPS (as borrower) and various banks and financial institutions (as lenders), including the Bank, in relation to a term loan facility of up to USD250,000,000, as amended, novated, supplemented, extended or restated

"Finance Documents"
among other things, the Facility Agreement, the Deed of Guarantee, the NBSS Share Pledge, the TBP Share Pledge, and any other documents relating to the Facility Agreement

"General Manager"
a general manager of the Company

"Group"
the Company and its subsidiaries

"H Share(s)"
the overseas listed foreign share(s) in the share capital of the Company with nominal value of RMB1.00 each, which are traded in Hong Kong dollars and listed on the Stock Exchange

"H Share Shareholder(s)"
holder of H Share(s)

"HBW"
Hong Kong Blue Whale International Ltd (香港藍鯨國際有限公司), a limited liability company incorporated under the laws of the Hong Kong and a wholly-owned subsidiary of the Company

"HG"
PT Harita Guna Dharma Bhakti, a limited liability company established under the laws of Indonesia and the ultimate parent entity of TBP controlled by family members of Ms. Lim

"HJF"
PT Halmahera Jaya Feronikel, a limited liability company established under the laws of Indonesia and directly held as to 36.9% by the Company

"HJR"
PT Harita Jayaraya, a limited liability company established under the laws of Indonesia and ultimately controlled by family members of Ms. Lim

"Hong Kong"
the Hong Kong Special Administrative Region of the PRC

DEFINITIONS

"HPAL project"
a nickel product smelting project on the Obi Island, phases I-II of which are operated by HPL and phase III of which is operated by ONC

"HPL"
PT Halmahera Persada Lygend, a limited liability company established under the laws of Indonesia, which is directly and indirectly held as to 54.9% by the Company and as to 45.1% by TBP, and a connected subsidiary of the Company

"IDR"
Indonesian rupiah, the lawful currency of Indonesia

"Independent Board Committee"
the independent committee of the Board, the members of which consist of the independent non-executive Directors, formed to advise all Independent Shareholders with respect to the Connected JV Agreements, Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge

"Independent Financial Adviser" or "Grand Moore"
Grand Moore Capital Limited, a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on Corporate Finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the transactions contemplated under the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge

"Independent Shareholders"
Shareholders other than Ms. Lim and her associates and any other persons who are required to abstain from voting on resolutions to approve the transactions contemplated under the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge at the EGM pursuant to the Listing Rules

"Independent Third Party(ies)"
any entity(ies) or person(s) who, to the best of the knowledge, information and belief of the Directors, is/are not a connected person(s) of the Company within the meaning ascribed thereto under the Listing Rules

"Indonesia"
the Republic of Indonesia

DEFINITIONS

"Indonesian Entities" subsidiaries of the Company from time to time which have TBP as a substantial shareholder, including HPL, KPS, ONC, OSS, and DCM, and are therefore connected subsidiaries of the Company

"Indonesian Laws" any applicable national, provincial, local law and regulations which applicable in the territory of the Republic of Indonesia

"Indonesian Partner" or "TBP" PT Trimegah Bangun Persada, a limited liability company established under the laws of Indonesia and a substantial shareholder of certain non-wholly owned subsidiaries of the Company, together with its associates

"IPO" the initial public offering of H Shares of the Company

"JV Agreements" the MJM Shareholders Agreement, the New MJM Shareholders Agreement, the CKM Shareholders Agreement, the DCM Shareholders Agreement, the ONC Amendment Agreement and the BBS Shareholders Agreement

"JV Companies" MJM, CKM, DCM, ONC and BBS

"KPS" PT Karunia Permai Sentosa, a limited liability company established under the laws of Indonesia and a connected subsidiary of the Company. As at the Latest Practicable Date, KPS is indirectly held as to 65% by the Company through Baoxin Special Steel and as to 35% by TBP

"KPS Loan" the loan facility under the KPS Loan Agreement

"KPS Loan Agreement" the loan agreement entered into between KPS (as borrower) and HJR (as lender) dated 9 December 2024, in relation to the loan facility of up to USD50,000,000 (equivalent approximately to IDR794,600,000,000)

"KPS Loan Announcement" the announcement of the Company dated 9 December 2024 in relation to the KPS Loan

"Latest Practicable Date" 18 December 2024, being the latest practicable date prior to the publication of this circular for the purpose of ascertaining certain information contained herein

"Li Yuen" Li Yuen Pte Ltd., a limited liability company established under the laws of Singapore and is indirectly and solely held by Ms. Lim

DEFINITIONS

"Listing Rules"
the Rules Governing the Listing of Securities on the Stock Exchange, as amended, supplemented or otherwise modified from time to time

"LSJ"
PT Lima Srikandi Jaya, a limited liability company incorporated under the laws of Indonesia and ultimately controlled by family members of Ms. Lim

"Lygend Investment"
Zhejiang Lygend Investment Co., Ltd.* (浙江力勤投資有限公司), a limited liability company established in the PRC, controlled by Mr. Cai Jianyong, and one of the Company's controlling shareholders

"Lygend New Power"
Lygend New Power (Hong Kong) Limited, a limited liability company established under the laws of Hong Kong and a wholly-owned subsidiary of the Company

"MJM"
PT Makmur Jaya Maritimindo, a limited liability company established under the laws of Indonesia on 9 March 2023

"MJM Shareholders Agreement"
the shareholders' agreement entered into between HBW and LSJ on 15 December 2023 in relation to, among other things, the shareholding structure of shareholders as well as the composition of the board of directors and board of commissioners of MJM. For further details, please refer to the announcement of the Company dated 15 December 2023 and 22 December 2023

"Ms. Lim"
Ms. Lim Shu Hua, Cheryl, the de facto controller of Feng Yi Pte. Ltd., a 17% Shareholder of the Company

"NBSS Share Pledge"
the deed of shares pledge expected to be entered into between Baoxin Special Steel (as pledgor), the Bank (as pledgee) and KPS pursuant to the Facility Agreement, in relation to, among other things, the pledging of the shares of Baoxin Special Steel in KPS

"New MJM Shareholders Agreement"
the shareholders' agreement entered into between HBW and LSJ on 30 May 2024 in relation to, among other things, the shareholding structure of shareholders as well as the composition of the board of directors and board of commissioners of MJM. For further details, please refer to the announcement of the Company dated 30 May 2024 and 5 June 2024

DEFINITIONS

“Ningbo Litai”
Ningbo Litai Enterprise Management Partnership (Limited Partnership)* (寧波勵泰企業管理合夥企業(有限合夥)), a limited partnership established in the PRC, of which Ms. Fei Feng (費鳳) is the general partner, and one of the Company’s Employee Incentive Platforms

“Ningbo Lizhan”
Ningbo Lizhan Trade Co., Ltd.* (寧波勵展貿易有限公司), a limited liability company established in the PRC and one of the Company’s controlling shareholders, which is in turn wholly-owned by Lygend Investment

“Ningbo Lygend IPM”
Ningbo Lygend Industrial Park Management Co., Ltd.* (寧波力勤園區管理有限公司), a limited liability company established under the laws of the PRC and a wholly-owned subsidiary of the Company

“Ningbo Xinpan”
Ningbo Xinpan Enterprise Management Partnership (Limited Partnership)* (寧波鑫盼企業管理合夥企業(有限合夥)), a limited partnership established in the PRC, of which Ms. Fei Feng (費鳳) is the general partner, and one of the Company’s Employee Incentive Platforms

“Ningbo Yangcheng”
Ningbo Yangcheng Enterprise Management Partnership (Limited Partnership)* (寧波揚承企業管理合夥企業(有限合夥)), a limited partnership established in the PRC, of which Ms. Fei Feng (費鳳) is the general partner, and one of the Company’s Employee Incentive Platforms

“Ningbo Yufeng”
Ningbo Yufeng Enterprise Management Partnership (Limited Partnership)* (寧波禹豐企業管理合夥企業(有限合夥)), a limited partnership established in the PRC, of which Ms. Fei Feng (費鳳) is the general partner, and one of the Company’s Employee Incentive Platforms

“Obi Island”
the largest island among a group of islands in the Indonesian province of North Maluku, the place where the Company’s HPAL project and RKEF project are located

“Obi projects”
HPAL project and RKEF project

“Obligor(s)”
the obligors under the Finance Documents, namely KPS (as borrower), HPL (as guarantor), Baoxin Special Steel and TBP (as shareholders of KPS), HJR and the Company (as sponsors)

DEFINITIONS

"ODI" overseas direct investment

"ONC" PT OBI Nickel Cobalt, a limited liability company established under the laws of Indonesia and indirectly held as to 60% by the Company and a connected subsidiary of the Company

"ONC Amendment Agreement" the agreement entered into between Lygend New Power, TBP and Li Yuen on 28 October 2024 to amend the terms of the ONC Shareholders Agreement

"ONC Shareholders Agreement" the shareholders agreement entered into between Lygend New Power, TBP and Li Yuen on 10 November 2021 in relation to, among others, the shareholding structure as well as composition of the board of directors and board of commissioners of ONC

"OSS" PT Obi Stainless Steel, a limited liability company established under the laws of Indonesia and indirectly held as to 65% by the Company and a connected subsidiary of the Company

"percentage ratio" has the meaning ascribed to it under the Listing Rules

"PRC" the People's Republic of China

"President Commissioner" has the meaning ascribed to it under the articles of association of DCM, ONC and BBS, as the case may be

"President Director" has the meaning ascribed to it under the articles of association of DCM, ONC and BBS, as the case may be

"Prospectus" the prospectus of the Company dated 21 November 2022

"RKEF project" a nickel product smelting project on the Obi Island, phase I of which is operated by HJF and phase II of which is operated by KPS

"RMB" Renminbi, the lawful currency of the PRC

"Secured Liabilities" all present and future obligations and liabilities of each Obligor to any Secured Party under each Finance Document

"Secured Party(ies)" the secured parties under the Finance Documents

– 9 –

DEFINITIONS

“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended from time to time
“Share(s)”	share(s) in the share capital of the Company with a nominal value of RMB1.00 each, comprising Unlisted Share(s) and H Share(s)
“Shareholder(s)”	holder(s) of the share(s) of the Company from time to time
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“substantial shareholder(s)”	has the meaning ascribed to it under the Listing Rules
“Supervisor(s)”	the supervisor of the Company
“TBP”	PT Trimegah Bangun Persada, a limited liability company established under the laws of Indonesia and a substantial shareholder of certain non-wholly owned subsidiaries of the Company
“TBP Share Pledge”	the deed of shares pledge entered into between TBP (as pledger), the Bank (as pledgee) and KPS on 10 December 2024, in relation to, among other things, the pledging of the shares of TBP in KPS
“Treasury Share(s)”	has the meaning ascribed to it under the Listing Rules
“Unlisted Share(s)”	comprising domestic shares of the Company, being ordinary share(s) issued by the Company and not listed on any stock exchange with a nominal value of RMB1.00 each, which are subscribed for and paid for in RMB by domestic investors
“Unlisted Share Shareholder(s)”	holder(s) of Unlisted Share(s)
“US$” or “USD”	United States Dollar, the lawful currency of the United States
“%”	per cent

For identification purpose only
10 -

LETTER FROM THE BOARD

九勤资源

LYGEND RESOURCES

Lygend Resources & Technology Co., Ltd.

宁波力勤资源科技股份有限公司

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

(Stock Code: 2245)

Executive Directors:

Mr. CAI Jianyong (Chairman)

Ms. FEI Feng

Mr. CAI Jianwei

Mr. YU Weijun

Mr. WANG Ling

Non-executive Director:

Mr. Lawrence LUA Gek Pong

Independent Non-executive Directors:

Dr. HE Wanpeng

Ms. ZHANG Zhengping

Dr. WANG James Jixian

Registered Office:

2/F, Mingchuang Building

No. 707 Tiantong South Road

Yinzhou District

Ningbo City, Zhejiang Province

PRC

Head office in the PRC:

10-11/F, Building C10

R&D Park, Lane 299

Guanghua Road Yinzhou District

Ningbo City, Zhejiang Province

PRC

Principal place of business

in Hong Kong:

46/F, Hopewell Centre

183 Queen's Road

East Wan Chai

Hong Kong

26 December 2024

To the Shareholders

Dear Sir or Madam,

(1) MAJOR AND CONNECTED TRANSACTIONS IN RELATION TO THE JV COMPANIES

(2) CONNECTED TRANSACTIONS IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE TO A CONNECTED SUBSIDIARY AND RECEIPT OF FINANCIAL ASSISTANCE FROM A CONNECTED PERSON

AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

I. INTRODUCTION

References are made to the announcement of the Company dated 28 October 2024 in relation to the Connected JV Agreements and the announcement of the Company dated 10 December 2024 in relation to the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge.

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information regarding, among other things, (i) the details of the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder; (ii) the recommendations made by the Independent Board Committee in respect of the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder; (iii) the opinions of Grand Moore, the Independent Financial Adviser, to the Independent Board Committee and the Independent Shareholders; and (iv) the notice of EGM so that you can make informed decisions when you vote at the EGM on the resolutions proposed in connection with the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder.

II. MATTERS TO BE RESOLVED AT THE EGM

A. Connected JV Agreements

1. DCM Shareholders Agreement

Reference is made to the Prospectus in relation to, among others, the shareholders agreement entered into by Ningbo Lygend IPM and TBP in respect of DCM ("Old DCM Shareholders Agreement").

On 28 October 2024, Ningbo Lygend IPM and TBP, both being existing shareholders of DCM, entered into the DCM Shareholders Agreement to replace the Old DCM Shareholders Agreement. Pursuant to the DCM Shareholders Agreement, the DCM Parties agreed to increase the capital commitment by an IDR equivalent of USD51,620,000 in total, which will be injected into DCM by Ningbo Lygend IPM and TBP in proportion to their respective shareholding in DCM, being 60% to be held by Ningbo Lygend IPM and 40% to be held by TBP. Accordingly, upon completion of the capital contribution, the shareholding ratios of Ningbo Lygend IPM and TBP in DCM shall remain unchanged.

Principal Terms of the DCM Shareholders Agreement

The principal terms of the DCM Shareholders Agreement are set out below:

Date

28 October 2024

Parties

(i) Ningbo Lygend IPM; and
(ii) TBP (each a "DCM Party", and collectively "DCM Parties")

12 -

LETTER FROM THE BOARD

Capital Increase and Shareholding Structure

Prior to entering into the DCM Shareholders Agreement, DCM had an authorized capital of IDR10,100,000,000,000, of which IDR2,525,000,000, representing 25% of the authorized capital of DCM, had been paid up by the existing shareholders of DCM. Immediately prior to entering into the DCM Shareholders Agreement, DCM was held as to 60% by Ningbo Lygend IPM and 40% by TBP.

Pursuant to the DCM Shareholders Agreement, the DCM Parties agreed to increase the capital commitment by an IDR equivalent of USD51,620,000 in total. As set out in the section headed "Reasons for and Benefits of the DCM Shareholders Agreement" in this circular, the reason for the increase in the capital commitment is to allow DCM to construct and operate additional facilities. Of the increase in capital commitment, (i) USD18,067,000, representing 35% of the total capital commitment, will be injected by the DCM Parties in proportion to their respective shareholding upon the approval of the Independent Shareholders; and (ii) USD33,553,000, representing 65% of the total capital commitment, will be injected by the DCM Parties in proportion to the DCM Parties' respective shareholding in compliance with the applicable laws (including obtaining the relevant PRC ODI approvals), and as and when DCM's funding needs arise in its construction and operation of the additional facilities, including as and when funding needs arise when DCM begins undertaking preparatory work on the construction of the additional facilities (including hiring the relevant additional personnel, acquiring additional plant and equipment). It is currently expected that the entire amount of the capital injection under the DCM Shareholders Agreement will be completed before or around the end of 2026.

The proposed capital commitment does not involve the use of any proceeds from the IPO. The capital injection will be carried out in stages before or around the end of 2026 and will be financed through the cash flow generated through the business of the Group. If additional financial resources are required, the Company will also consider carrying out equity fund raising transaction.

The shareholding structure of DCM immediately before and after the completion of the capital contribution in IDR and the equivalents in USD and RMB are set out below:

DCM Shareholders	Immediately before the completion of the capital contribution (to be paid in IDR)				Immediately after the completion of the capital contribution (to be paid in IDR)
	Amount of contribution (IDR)	Amount of contribution (in USD)	Amount of contribution (in RMB)	Shareholding percentage	Amount of contribution (IDR)	Amount of contribution (in USD)	Amount of contribution (in RMB)	Shareholding percentage
Ningbo Lygend IPM	1,515,000,000	96,146	682,624	60%	489,552,144,357	31,068,146	220,580,730	60%
TBP	1,010,000,000	64,097	455,082	40%	326,368,090,985	20,712,097	147,053,817	40%
Total	2,525,000,000	160,243	1,137,706	100%	815,920,235,342	51,780,243	367,634,547	100%

As Ningbo Lygend IPM will continue to be able to exercise 60% of the voting rights in DCM, DCM remains a subsidiary of the Group and the financial results of DCM will continue to be consolidated into the consolidated statements of the Group.

The amount of capital increase and the amount of total capital commitment were determined by the DCM Parties after arm's length negotiation with reference to, among other things, the funding requirements of DCM and DCM Parties' respective interests in DCM. The capital contribution by Ningbo Lygend IPM will be funded by the internal resources of the Group.

LETTER FROM THE BOARD

Future Funding

If DCM needs additional capital to maintain or expand its business, the DCM Parties agree that DCM shall raise future funding based on the following order of priority:

(a) firstly, from DCM’s borrowings from financial institutions, and in this case the DCM Shareholders agree to provide any required corporate guarantee in line with the requirements from the financial institutions to secure DCM’s borrowings;

(b) next, from borrowings from the DCM Shareholders pro rata to their respective shareholding percentage in DCM; and

(c) lastly, from additional equity injection from DCM Shareholders, and in this matter DCM shall issue new shares of DCM and the DCM Parties must subscribe such new shares pro rata in respect of its share proportion in DCM. For the avoidance of doubt, the aforementioned additional equity injection and new shares of DCM refer to equity injections and new shares in addition to any capital commitments made under any non-paid-up capital in DCM.

(d) If a DCM Shareholder cannot or is not willing to contribute in any future funding (“DCM Non-Participant”), the other DCM Shareholder (“DCM Participant”) shall have the pro-rata right, but is not obligated, to make additional contribution funding in the amount of the Non-Participant’s portion. If the DCM Non-Participant agrees DCM Participant to make such additional contribution funding, the DCM Non-Participant (together with the DCM Participant) shall procure DCM to issue such number of new shares that is equal to the additional contribution funding amount, to be subscribed by the DCM Participant, as well as to conduct all actions as required by Indonesian Law, including but not limited, to recording the issuance of new shares in the DCM’s shareholders’ register and Online Single Submission (OSS) System in Indonesia.

DCM Board of Directors

The DCM Board of Directors shall consist of five members of whom one shall be the President Director. Ningbo Lygend IPM shall have the right to nominate a total of three directors, including the Vice President Director whereas TBP shall have the right to nominate a total of two directors, including the President Director, to the DCM Board of Directors. The President Director will not have any special powers, such as veto rights, on the DCM Board of Directors.

If there shall exist a vacancy on the DCM Board of Directors, the DCM Parties shall procure that a DCM General Meeting be held within 30 (thirty) days after the vacancy arises to fill such vacancy. Subject to the requirement on the composition of the DCM Board of Directors as mentioned above, the DCM Party(ies) entitled may nominate another individual to fill such vacancy, and each DCM Party entitled to vote shall attend the relevant DCM General Meeting and vote to ensure that such vacancy is filled.

LETTER FROM THE BOARD

DCM Board of Commissioners

The DCM Board of Commissioners shall consist of three members of whom one shall be the President Commissioner. Ningbo Lygend IPM shall have the right to nominate a total of two commissioners, including the President Commissioner, whereas TBP shall have the right to nominate one commissioner to the DCM Board of Commissioners.

Each DCM Party agrees that DCM Parties shall at all times have the right to vote for the removal of members of the DCM Board of Commissioners, but does not have the right to vote for the removal of commissioners appointed by the DCM Parties unless the DCM Party entitled to nominate such Commissioner requested or consented to such removal in writing.

If there shall exist a vacancy on the DCM Board of Commissioners, the DCM Parties shall procure that a DCM General Meeting be held within 30 (thirty) days after the vacancy arises to fill such vacancy. Subject to the requirement on the composition of the DCM Board of Commissioners as mentioned above, the DCM Party(ies) entitled may nominate another individual to fill such vacancy, and each DCM Party entitled to vote shall attend the relevant DCM General Meeting and vote to ensure that such vacancy is filled.

DCM Commissioners' Reserved Matters

The following actions are subject to the approval from the DCM Board of Commissioners:

(i) to sell, transfer, release rights, or give warrant on immovable asset own in a single financial year by the DCM equal to or less than 50% (fifty percent) from the DCM's assets;

(ii) creating any Encumbrance over any of the DCM's assets or property;

(iii) establish a company or participate in other company inside or outside Republic of Indonesia;

(iv) issue or conduct an action to create new Debt on behalf of DCM, including but not limited to obtain new Debt facility from any party, conduct a Debt restructuring, and/or issued a Debt instrument in any kind or form;

(v) enter into any agreement not on bona fide arm's length terms or any related party dealings of DCM, including transactions between the DCM with any of the following entities: (1) shareholders; (2) directors or commissioners of DCM; and/or (3) their affiliates;

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(vi) initiating or settling any litigation, arbitration or similar proceedings; and/or
(vii) act of granting or varying (1) any share option or right to subscribe, acquire or convert into shares; and (2) issuance of management or employees stock ownership plan.

DCM Shareholders’ Reserved Matters

Subject to prevailing Indonesian Law, the following actions shall obtain the approval of the DCM Shareholders:

(i) increasing or reducing the share capital of DCM or issuing or allotting or repurchasing, reducing, redeeming, converting, cancelling or otherwise reorganising any share or other securities, including in relation to Future Funding as mentioned above;
(ii) DCM to conduct a merger, acquisition, or consolidation;
(iii) any change in the number and/or composition of directors and commissioners of DCM and appointment and/or removal of the member of DCM Board of Directors and/or DCM Board of Commissioners;
(iv) making any material change in the nature or scope of business of DCM, including introducing or discontinuing any field of activity, ceasing to conduct its business;
(v) proposing or resolving to dissolve and liquidate DCM or the filing of a petition for dissolution and liquidation of DCM or the making of any arrangement by DCM with creditors generally or any application for voluntary bankruptcy or suspension of payment in respect of DCM;
(vi) DCM’s initial public offering and registration to any stock exchange;
(vii) approving or making any amendments to DCM’s annual budget and business plan, including capital expenditure; and/or
(viii) appoint an auditor and approving the audited financial statements and annual report of DCM, its financial year or principal accounting policies employed.

LETTER FROM THE BOARD

Transfer of New DCM Shares

If a DCM Shareholder (“Selling DCM Shareholder”) intends to sell any/all its shares (“Offered DCM Shares”) to a third party (“Prospective DCM Transferee”), the Selling DCM Shareholder shall be obligated to first offer such shares on pro-rata basis to the other DCM Shareholders (“Remaining DCM Shareholder”) by delivering a written notice to the Remaining DCM Shareholder (“DCM Offer Notice”). The Remaining DCM Shareholder shall have the obligation to respond to such offer within 90 (ninety) days from the transfer notice made by the Selling DCM Shareholder. If the Remaining DCM Shareholder fails to respond to the notice provided by the Selling DCM Shareholder or decides not to purchase the Offered DCM Shares, the Selling DCM Shareholder may offer the DCM Offered Shares to the Prospective DCM Transferee with the same and not below the terms and conditions as stated in the DCM Offer Notice.

The Prospective DCM Transferee must enter into a deed of adherence, agreeing to be bound by the provisions of the DCM Shareholders Agreement. If the Prospective DCM Transferee does not enter into the deed of adherence in the form required by this Agreement, the transfer of the shares shall be considered to be null and void.

Reasons for and Benefits of the DCM Shareholders Agreement

DCM is responsible for the operation of the industrial park in Obi Island. Given the continuous development of the Obi projects which will result in an increase in deployment of human capital, the Group envisages a need for additional facilities to support the staff who are involved in the Obi projects. Accordingly, the capital injected into DCM will be used for the construction and operation of supporting public auxiliary facilities, such as staff dormitories and canteens, in the industrial park on the Obi Island, which will help to further reduce the operating costs of the Group, increase the profitability and operational efficiency of the Group, and enhance the comprehensive risk resistance ability of the Group.

The Company and TBP, the Indonesian Partner, have collaborated on various projects, such as setting up joint ventures involved in the Obi projects. The Company is of the view that strengthening the relationship with the Indonesian Partner is beneficial to the Group as a whole. The entering into of the DCM Shareholders Agreement and increased capital commitment represents the continued collaboration with the Indonesian Partner, and supports the Company's strategy for the development of its nickel product production projects in the Obi Island, where the Group can continue to leverage on the knowledge and experience of the Indonesian Partner within the Indonesian nickel ore mining business sector, and can pave the way for further business developments and relationships. The increased capital commitment is anticipated to enhance the operational efficiency of DCM and support DCM's purpose of building and running the supporting public auxiliary facilities of the industrial park in Obi Island, generating returns to the Company and bringing synergy effect to the Company and TBP.

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The Board (excluding the independent non-executive Directors, whose views are set out in the letter from the Independent Board Committee) is of the view that the terms of the DCM Shareholders Agreement and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Implications under the Listing Rules

As at the Latest Practicable Date, Ningbo Lygend IPM is a wholly-owned subsidiary of the Company. TBP is owned as to 86.45% by HJR, and HJR is ultimately controlled by family members of Ms. Lim. Ms. Lim is the de facto controller of Feng Yi Pte. Ltd., a 17% Shareholder of the Company. As such, Ms. Lim is indirectly interested in 17% of the shares of the Company and is a substantial Shareholder and connected person of the Company pursuant to Rule 14A.07(1) of the Listing Rules. Ms. Lim's family members are deemed connected persons of the Company pursuant to Rule 14A.21 of the Listing Rules. Accordingly, HJR is an associate of Ms. Lim and is a connected person of the Company pursuant to Rule 14A.07(4) of the Listing Rules, and TBP, being a subsidiary of HJR, is a connected person of the Company. Accordingly, the transactions contemplated under the DCM Shareholders Agreement constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

2. ONC Amendment Agreement

Reference is made to the Prospectus in relation to, among others, the ONC Shareholders Agreement entered into by Lygend New Power, TBP and Li Yuen. Please refer to the Prospectus for details on the board of directors and senior management of ONC and the ONC Shareholders Agreement.

On 28 October 2024, Lygend New Power, TBP and Li Yuen, all existing shareholders of ONC, entered into the ONC Amendment Agreement to vary the ONC Shareholders Agreement and increase the capital commitment by an IDR equivalent of USD466,000,000 in total, which will be injected into ONC by Lygend New Power, TBP and Li Yuen in proportion to their respective shareholding in ONC, being 60% to be held by Lygend New Power, 10% to be held by TBP and 30% to be held by Li Yuen.

Principal Terms of the ONC Amendment Agreement

The principal terms of the ONC Amendment Agreement are set out below:

Date

28 October 2024

LETTER FROM THE BOARD

Parties

(i) Lygend New Power;
(ii) TBP; and
(iii) Li Yuen (each a “ONC Party”, and collectively “ONC Parties”)

Capital Increase and Shareholding Structure

Prior to entering into the ONC Amendment Agreement, ONC had an authorized capital of IDR6,618,093,678,000, of which the entire authorized share capital amount had been paid up by the existing shareholders of ONC, Lygend New Power, Li Yuen and TBP. ONC is held as to 60%, 30% and 10% by Lygend New Power, Li Yuen and TBP respectively.

Pursuant to the ONC Amendment Agreement, the ONC Parties agree to increase the capital commitment by an IDR equivalent of USD466,000,000 in total. It is intended that prior to the increase in capital commitment, ONC will undergo an increase in authorized share capital in accordance with Indonesian law, to an amount of approximately IDR13,961,026,187,400.

As set out in the section headed “Reasons for and Benefits of the ONC Amendment Agreement” in this circular, the reason for the increase in the capital commitment is to allow ONC to expand its product mix. The ONC parties will inject the additional capital commitment in proportion to their respective shareholding in compliance with the applicable laws (including obtaining the relevant PRC ODI approvals), and as and when ONC’s funding needs arise in its expansion of its product mix, including as and when funding needs arise when ONC begins undertaking preparatory work on the expansion of its product mix (including hiring the relevant additional personnel, acquiring additional plant and equipment). It is currently expected that the entire amount of the capital injection under the ONC Amendment Agreement will, subject to the timing of obtaining the ODI approval and the construction progress, be completed before or around the end of 2027.

The proposed capital commitment does not involve the use of any proceeds from the IPO. The capital injection will be carried out in stages before or around the end of 2027 and will be financed through the cash flow generated through the business of the Group. If additional financial resources are required, the Company will also consider carrying out equity fund raising transaction.

The shareholding structure of ONC immediately before and after the completion of the capital contribution in IDR and the equivalents in USD and RMB are set out below:

ONC Shareholders	Immediately before the completion of the capital contribution (to be paid in IDR)				Immediately after the completion of the capital contribution (to be paid in IDR)
	Amount of contribution (IDR)	Amount of contribution (in USD)	Amount of contribution (in RMB)	Shareholding percentage	Amount of contribution (IDR)	Amount of contribution (in USD)	Amount of contribution (in RMB)	Shareholding percentage
Lygend New Power	3,970,856,206,800	252,000,000	1,789,174,800	60%	8,376,615,712,440	531,600,000	3,774,306,840	60%
TBP	661,809,367,800	42,000,000	298,195,800	10%	1,396,102,618,740	88,600,000	629,051,140	10%
Li Yuen	1,985,428,103,400	126,000,000	894,587,400	30%	4,188,307,856,220	265,800,000	1,887,153,420	30%
Total	6,618,093,678,000	420,000,000	2,981,958,000	100%	13,961,026,187,400	886,000,000	6,290,511,400	100%

LETTER FROM THE BOARD

As Lygend New Power will be able to exercise 60% of the voting rights in ONC, ONC is a subsidiary of the Group and the financial results of ONC will continue to be consolidated into the consolidated statements of the Group.

The amount of capital increase and the amount of total capital commitment were determined by the ONC Parties after arm's length negotiation with reference to, among other things, the funding requirements of ONC and ONC Parties' respective interests in ONC. The capital contribution by Lygend New Power will be funded by the internal resources of the Group.

Reasons for and Benefits of the ONC Amendment Agreement

ONC is the project company of phase III of the HPAL project. To enable the Group to adapt to diversified market demands, the Group is considering modifying its product mix to include nickel products which have gone through the purification process. Accordingly, the increase in capital commitment will provide capital for ONC to carry out additional processes to purify the nickel products of the Group and thereby diversifying the Group's product matrix. The diversification of the Group's product mix is expected to result in long-term sustainable growth based on achieving economies of scale, reduction of the Group's dependence of the rare metal industry in foreign countries, and safeguarding of the development of the national nickel industry.

Further, similar to the DCM Shareholders Agreement, the entering into of the ONC Amendment Agreement to increase the capital commitment represents the continued collaboration with the Indonesian Partner and the Board considers this to support the Company's strategy for the development of its nickel product production projects in the Obi Island and is beneficial to the Group's development.

The Board (excluding the independent non-executive Directors, whose views are set out in the letter from the Independent Board Committee) is of the view that the terms of the ONC Amendment Agreement and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Implications under the Listing Rules

As at the Latest Practicable Date, Lygend New Power is a wholly-owned subsidiary of the Company. TBP is owned as to 86.45% by HJR, and HJR is ultimately controlled by family members of Ms. Lim. Li Yuen is indirectly and solely held by Ms. Lim. Ms. Lim is the de facto controller of Feng Yi Pte. Ltd., a 17% Shareholder of the Company. As such, Ms. Lim is indirectly interested in 17% of the shares of the Company and is a substantial Shareholder and connected person of the Company pursuant to Rule 14A.07(1) of the Listing Rules. Ms. Lim's family members are deemed connected persons of the Company pursuant to Rule 14A.21 of the Listing Rules. Accordingly, each of HJR and Li Yuen is an associate of Ms. Lim and is a connected person of the Company

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pursuant to Rule 14A.07(4) of the Listing Rules, and TBP, being a subsidiary of HJR, is a connected person of the Company. Accordingly, the transactions contemplated under the ONC Amendment Agreement constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

3. BBS Shareholders Agreement

On 28 October 2024, Baoxin Special Steel and HPL entered into the BBS Shareholders Agreement in relation to, among others, the establishment of a joint venture company, BBS.

Pursuant to the BBS Shareholders Agreement, the initial investment amount of BBS is an IDR equivalent of USD505,000,000, which the BBS Parties will inject in proportion to their respective shareholding in BBS, being 5.76% to be held by Baoxin Special Steel and 94.24% to be held by HPL.

Principal Terms of the BBS Shareholders Agreement

The principal terms of the BBS Shareholders Agreement are set out below:

Date

28 October 2024

Parties

(i) Baoxin Special Steel; and
(ii) HPL (each a “BBS Party”, and collectively “BBS Parties”)

Shareholding Structure

Pursuant to the BBS Shareholders Agreement, the BBS Parties agreed that the initial authorized capital of BBS upon its incorporation shall be IDR89,244,000,000 (equivalent to USD5,669,886). It is intended that prior to the investment of the initial investment amount, BBS will undergo an increase in authorized share capital, to an amount of approximately IDR7,948,699,495,000.

As set out in the section headed “Reasons for and Benefits of the BBS Shareholders Agreement” in this circular, the reason for the establishment of BBS and the injection of the initial investment amount is to build and run a HPAL smelting slag treatment plant in Obi Island. Of the initial authorized share capital amount, IDR22,311,000,000 (equivalent to USD1,417,472), representing 25% of the authorized capital of BBS shall be paid up by the BBS Parties. The remaining non-paid-up authorized capital will be subscribed, and the initial investment amount will be injected thereafter, in proportion to the BBS Parties’ respective shareholding

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in compliance with the applicable laws (including obtaining the relevant PRC ODI approvals), and as and when BBS' funding needs arise in its building and operation of the HPAL smelting slag treatment plant, including as and when funding needs arise when BBS begins undertaking preparatory work on the building of the plant (including hiring the relevant additional personnel, acquiring additional plant and equipment). It is currently expected that the entire amount of the capital injection under the BBS Shareholders Agreement will, subject to the actual construction process, be completed before or around the end of 2027.

Pursuant to the BBS Shareholders Agreement, the initial investment amount is an IDR equivalent of USD505,000,000 and the total investment amount shall be determined after the completion of site investigation and feasibility study.

The shareholding structure of BBS upon establishment in IDR and the equivalents in USD and RMB are as follows:

BBS Shareholders	Amount of contribution (IDR)	Amount of contribution (in USD)	Amount of contribution (in RMB)	Shareholding percentage
Baoxin Special Steel	457,845,090,912	29,088,000	206,521,891	5.76%
HPL	7,490,854,404,088	475,912,000	3,378,927,609	94.24%
Total	7,948,699,495,000	505,000,000	3,585,449,500	100%

As HPL will be able to exercise 94.24% of the voting rights in BBS, BBS is a subsidiary of the Group and the financial results of BBS will continue to be consolidated into the consolidated statements of the Group.

The total amount of capital contribution was determined by the BBS Parties after arm's length negotiation with reference to, among other things, the funding requirements of BBS and the BBS Parties' respective interests in BBS. The capital contributions by Baoxin Special Steel and HPL are expected to be funded by the internal resources of the Group.

As BBS is not yet established as at the Latest Practicable Date, no financial information is available to disclose.

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Future Funding

If BBS needs additional capital to maintain or expand its business, the BBS Parties agree that BBS shall raise future funding based on the following order of priority:

(a) first, from BBS’ borrowings from financial institutions, and in this case the BBS Shareholders agree to provide any required corporate guarantee in line with the requirements from the financial institutions to secure BBS’ borrowings;

(b) next, from BBS’ borrowings from the BBS Shareholders pro rata to their respective shareholding percentage in BBS; or

(c) lastly, from additional equity injection from BBS Shareholders, and in this matter BBS shall issue new shares of BBS and the BBS Parties must subscribe such new shares pro rata in respect of its share proportion in BBS. For the avoidance of doubt, the aforementioned additional equity injection and new shares of BBS refer to equity injections and new shares in addition to any capital commitments made under any non-paid-up capital in BBS.

(d) If a BBS Shareholder cannot or is not willing to contribute in any future funding (“BBS Non-Participant”), the other BBS Shareholder (“BBS Participant”) shall have the pro-rata right, but is not obligated, to make additional contribution funding in the amount of the BBS Non-Participant’s portion. If the BBS Non-Participant agrees BBS Participant to make such additional contribution funding, the BBS Non-Participant (together with the BBS Participant) shall procure BBS to issue such number of new shares that is equal to the additional contribution funding amount, to be subscribed by the BBS Participant, as well as to conduct all actions as required by Indonesian Law, including but not limited, to recording the issuance of new shares in BBS’ shareholders’ register and Online Single Submission (OSS) System in Indonesia.

BBS Board of Directors

The BBS Board of Directors shall consist of one member of whom shall be the President Director nominated by HPL.

If there shall exist a vacancy on the BBS Board of Directors, then the BBS Parties shall procure that a BBS General Meeting be held within 30 days after the vacancy arises to fill such vacancy. Subject to the requirement on composition of the BBS Board of Directors as mentioned above, each BBS Party entitled to vote shall attend the relevant BBS General Meeting and vote to ensure that such vacancy is filled.

LETTER FROM THE BOARD

BBS Board of Commissioners

The BBS Board of Commissioners shall consist of one member of whom shall be the commissioner nominated by the Company.

If there shall exist a vacancy on the BBS Board of Commissioners, then the BBS Parties shall procure that a BBS General Meeting be held within 30 days after the vacancy arises to fill such vacancy. Subject to the requirement on composition of the BBS Board of Commissioners as mentioned above, each BBS Party entitled to vote shall attend the relevant BBS General Meeting and vote to ensure that such vacancy is filled.

BBS Commissioners' Reserved Matters

The following actions are subject to the approval from the BBS Board of Commissioners:

(i) to sell, transfer, release rights, or give warrant on immovable asset that is owned in a single financial year by the BBS equal to or less than 50% (fifty percent) from the BBS’ assets;

(ii) creating any Encumbrance over any of the BBS’ assets or property;

(iii) establish a company or participate in other company inside or outside Republic of Indonesia;

(iv) issue or conduct an action to create new Debt on behalf of BBS, including but not limited to obtain new Debt facility from any party, conduct a Debt restructuring, and/or issued a Debt instrument in any kind or form;

(v) enter into any agreement not on bona fide arm’s length terms or any related party dealings of BBS, including transactions between BBS with any of the following entities: (1) shareholders; (2) directors or commissioners of BBS; and/or (3) their Affiliates;

(vi) initiating or settling any litigation, arbitration or similar proceedings; and/or

(vii) act of granting or varying (1) any share option or right to subscribe, acquire or convert into shares; and (2) issuance of management or employees stock ownership plan.

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BBS Shareholders' Reserved Matters

Subject to prevailing Indonesian Law, the following actions shall obtain the approval of the shareholders of BBS:

(i) increasing or reducing the share capital of BBS or issuing or allotting any or repurchasing, reducing, redeeming, converting, cancelling or otherwise reorganising any share or other securities, including in relation to Future Funding as mentioned above;

(ii) BBS to conduct a merger, acquisition, or consolidation;

(iii) any change in the number and/or composition of directors and commissioners of BBS and appointment and/or removal of the member of BBS Board of Directors and/or BBS Board of Commissioners;

(iv) making any material change in the nature or scope of business of BBS, including introducing or discontinuing any field of activity, ceasing to conduct its business;

(v) proposing or resolving to dissolve and liquidate BBS or the filing of a petition for dissolution and liquidation of BBS or the making of any arrangement by BBS with creditors generally or any application for voluntary bankruptcy or suspension of payment in respect of BBS;

(vi) BBS' initial public offering and registration to any stock exchange;

(vii) approving or making any amendments to BBS' annual budget and business plan, including capital expenditure; and/or

(viii) appoint an auditor and approving the audited financial statements and annual report of BBS its financial year or principal accounting policies employed.

Transfer of BBS Shares

If a BBS Shareholder ("Selling BBS Shareholder") intends to sell any/all its shares ("Offered BBS Shares") to a third party ("Prospective BBS Transferee"), the Selling BBS Shareholder shall be obligated to first offer such shares on pro-rata basis to the other BBS Shareholders ("Remaining BBS Shareholder") by delivering a written notice to the Remaining BBS Shareholder ("BBS Offer Notice"). The Remaining BBS Shareholder shall have the obligation to respond to such offer within 90 (ninety) days from the transfer notice made by the Selling BBS Shareholder. If the Remaining BBS Shareholder fails to respond to the notice provided by the Selling BBS Shareholder or decides not to purchase the Offered BBS Shares, the Selling BBS Shareholder may offer the BBS Offered Shares to the Prospective BBS Transferee with the same and not below the terms and conditions as stated in the BBS Offer Notice.

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The Prospective BBS Transferee must enter into a deed of adherence, agreeing to be bound by the provisions of the BBS Shareholders Agreement. If the Prospective BBS Transferee does not enter into the deed of adherence in the form required by this Agreement, the transfer of the shares shall be considered to be null and void.

Reasons for and Benefits of the BBS Shareholders Agreement

The BBS Parties intend to establish BBS with the aim to build and run a HPAL smelting slag treatment plant in Obi Island with an annual treatment of 1,340,000 metric tons of HPAL smelting slags together with a slag warehouse and other ancillary facilities. The establishment of BBS will enable the Group to, in line with the principle of environmental protection, reduce wastage and effectively utilise resources. Further, given that the budget for infrastructure in Indonesia is constantly increasing and demand for HPAL smelting slag treatment is expected to correspondingly increase, the business of BBS will create new sources of income and enhance the Group's profitability.

The Board (excluding the independent non-executive Directors, whose views are set out in the letter from the Independent Board Committee) is of the view that the terms of the BBS Shareholders Agreement and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Implications under the Listing Rules

As at the Latest Practicable Date, Baoxin Special Steel is a wholly-owned subsidiary of the Company. HPL is a non-wholly owned subsidiary of the Company, directly and indirectly owned as to 54.9% by the Company and 45.1% by TBP. TBP is owned as to 86.45% by HJR, and HJR is ultimately controlled by family members of Ms. Lim. Ms. Lim is the de facto controller of Feng Yi Pte. Ltd., a 17% Shareholder of the Company. As such, Ms. Lim is indirectly interested in 17% of the shares of the Company and is a substantial Shareholder and connected person of the Company pursuant to Rule 14A.07(1) of the Listing Rules. Ms. Lim's family members are deemed connected persons of the Company pursuant to Rule 14A.21 of the Listing Rules. Accordingly, HJR is an associate of Ms. Lim and is a connected person of the Company pursuant to Rule 14A.07(4) of the Listing Rules, and TBP, being a subsidiary of HJR, is a connected person of the Company. Therefore, HPL is a connected subsidiary of the Company pursuant to Rule 14A.16(1) of the Listing Rules as Ms. Lim's family members are collectively entitled to control the exercise of 10% or more of the votes attaching to the shares of HPL. Accordingly, the transactions contemplated under the BBS Shareholders Agreement constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

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4. Aggregation and Implications of the JV Agreements under the Listing Rules

Reference is made to the announcements of the Company dated 17 June 2024 in relation to the CKM Shareholders Agreement and the announcements of the Company dated 15 December 2023, 22 December 2023, 30 May 2024, 5 June 2024 and 2 October 2024 in relation to the MJM Shareholders Agreement, the New MJM Shareholders Agreement and the further capital contribution thereunder. As disclosed in the announcements, the Group has established and/or increased its capital commitment to joint ventures owned by the Group and associates of Ms. Lim, who is a connected person of the Company.

As the transactions contemplated under the MJM Shareholders Agreement, the New MJM Shareholders Agreement, the CKM Shareholders Agreement, the DCM Shareholders Agreement, the ONC Amendment Agreement and the BBS Shareholders Agreement were entered into with parties who are connected with one another and were entered into within a 12-month period, they are aggregated and treated as if they were one transaction pursuant to Rule 14.22 and Rule 14A.81 of the Listing Rules. As the highest applicable percentage ratios with respect to transactions contemplated under the JV Agreements exceeds 25% but is less than 100%, such transactions constitute major and connected transactions of the Company and are subject to reporting, announcement, annual review and Independent Shareholders' approval requirements under Chapter 14 and Chapter 14A of the Listing Rules.

5. Directors' Confirmation

None of the Directors has any material interest in any of the Connected JV Agreements and the transactions contemplated under each of the Connected JV Agreements and hence no Director was required to abstain from voting on the relevant Board resolutions.

6. Information on the Group

The Group is principally engaged in business across the entire nickel industry value chain.

7. Information on DCM

DCM is a limited liability company established under the laws of Indonesia on 5 November 2007 and is principally engaged in the operation of industrial parks and other supporting facilities on the Obi Island. Prior to entering into the DCM Shareholders Agreement, DCM was owned as to 60% by Ningbo Lygend IPM and 40% by TBP.

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Set out below is the consolidated financial information of DCM for the financial years ended 31 December 2022 and 2023:

	For the financial year ended 31 December
	2022 (IDR)	2022 (RMB)	2023 (IDR)	2023 (RMB)
Net profit (loss) before tax**	(1,160,422,347)	(526,162)	(1,792,768,822)	(835,012)
Net profit (loss) after tax**	(1,160,422,347)	(526,162)	(1,792,768,822)	(835,012)

** based on the prevailing currency exchange rates at the time

As of 30 June 2024, the unaudited total assets and net assets of DCM were IDR268,130,220,697 (equivalent to RMB120,813,197) and IDR35,920,324,954 (equivalent to RMB16,184,857), respectively.

8. Information on ONC

ONC is a limited liability company established under the laws of Indonesia on 26 August 2021 and is principally engaged in the operation of phase III of the HPAL project. Prior to entering into the ONC Amendment Agreement, ONC was owned as to 60% by Lygend New Power, 30% by Li Yuen and 10% by TBP.

Set out below is the consolidated financial information of ONC for the financial years ending 31 December 2022 and 2023:

	For the financial year ended 31 December
	2022 (USD)	2022 (RMB)	2023 (USD)	2023 (RMB)
Net profit (loss) before tax**	(352,976)	(2,385,165)	(17,686,003)	(124,788,900)
Net profit (loss) after tax**	(352,976)	(2,385,165)	(17,686,003)	(124,788,900)

** based on the prevailing currency exchange rates at the time

As of 30 June 2024, the unaudited total assets and net assets of ONC were USD1,319,725,632 (equivalent to RMB9,369,920,015) and USD424,334,080 (equivalent to RMB3,012,729,535), respectively.

The net loss of ONC in 2023 was mainly attributable to the fact that ONC had incurred significant expenses necessary to the construction of Phase III of the HPAL project operated by ONC (the "ONC Project") in 2023, while the ONC Project itself was still under construction and not generating any revenue in the same financial year. As at the Latest Practicable Date, the ONC Project has been completed and is in operation, and is expected to contribute to the overall revenue and profit growth of the Group.

LETTER FROM THE BOARD

9. Information on the Parties Involved

HG is a company incorporated under the laws of Indonesia and is principally engaged in the business of investment holding. As at the Latest Practicable Date, HG is controlled by the family members of Ms. Lim.

Ningbo Lygend IPM is a company incorporated under the laws of PRC and is principally engaged in the business of park management service. As at the Latest Practicable Date, Ningbo Lygend IPM is a wholly-owned subsidiary of the Company.

Lygend New Power is a company incorporated under the laws of Hong Kong with limited liability and is principally engaged in the business of investment holding. As at the Latest Practicable Date, Lygend New Power is a wholly-owned subsidiary of the Company.

Li Yuen is a company incorporated in Singapore with limited liability and is principally engaged in the business of investment holding. As at the Latest Practicable Date, Li Yuen is indirectly and solely held by Ms. Lim.

HPL is a limited liability company established under the laws of Indonesia and is principally engaged in the business of production of nickel-cobalt compounds. As at the Latest Practicable Date, HPL is directly and indirectly held as to 54.9% by the Company and held as to 45.1% by TBP.

Baoxin Special Steel is a company established in the PRC with limited liability and is principally engaged in the business of equity investment. As at the Latest Practicable Date, Baoxin Special Steel is a wholly-owned subsidiary of the Company.

TBP is a company listed on the Indonesia Stock Exchange (IDX) (ticker code: NCKL) and incorporated under the laws of Indonesia. TBP is principally engaged in nickel resource development and nickel product smelting business. As at the Latest Practicable Date, TBP is owned as to 86.45% by HJR.

HJR is a limited liability company established under the laws of Indonesia, and is principally engaged in coal, nickel and mineral mining, oil palm cultivation, timberlog trading and manufacturing timberlogs. It is ultimately controlled by family members of Ms. Lim.

10. Exchange Rates

Pursuant to the DCM Shareholders Agreement, ONC Amendment Agreement and BBS Shareholders Agreement, unless otherwise specified, conversions of IDR to USD are based on the approximate exchange rate of USD1 to IDR15,757.3659, USD1 to IDR15,757.3659 and USD1 to IDR15,739.9990 respectively.

29 -

LETTER FROM THE BOARD

For the purpose of this circular, the translation of USD to RMB is based on the exchange rate of USD1 = RMB7.0999. The conversions are for illustration purpose only and should not be taken as a representation that any amounts in USD and RMB can be or could have been converted at the relevant dates at the above rates or at any other rates at all.

B. Financial Assistance

On 9 December 2024, KPS entered into the Facility Agreement, pursuant to which the lenders have agreed to make available a term loan facility of up to USD250,000,000 to KPS for the purpose of financing the development and construction of a large-scale ferronickel smelter project located at Obi Island of Indonesia by KPS as part of phase II of the RKEF project to increase the production capacity of the Group, subject to the terms and conditions set out in the Facility Agreement.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, each of the lenders is an Independent Third Party of the Group.

It is a condition precedent to the first utilisation under the Facility Agreement that, among other things, the Deed of Guarantee and the TBP Share Pledge be entered into by the relevant parties to secure the full and punctual payment and performance of the Secured Liabilities. In addition, it is a condition subsequent under the Facility Agreement that the NBSS Share Pledge will be entered into by relevant parties after getting necessary regulatory approvals to secure the full and punctual payment and performance of the Secured Liabilities.

1. Provision of Financial Assistance by the Group to KPS

Facility Agreement

Date

9 December 2024

Parties

(i) KPS;
(ii) The Bank, as the facility agent; and
(iii) Oversea-Chinese Banking Corporation Limited, as coordinating bank.

Facility

The lenders have made available a term loan facility of up to USD250,000,000 to KPS for the purpose of financing the development and construction of a large-scale ferronickel smelter project located at Obi Island of Indonesia.

LETTER FROM THE BOARD

Term of Facility

Subject to the terms of the Facility Agreement, for an initial term of 12 months from the date of the Facility Agreement.

Interest

An interest rate determined with reference to the short term interest rate target set by the US Federal Open Market Committee as published by the Federal Reserve Bank of New York plus a 1.75 per cent per annum.

Deed of Guarantee

On 10 December 2024, HPL and the Bank entered into the Deed of Guarantee, in relation to, among other things, the provision of a guarantee by HPL in favour of the Bank in respect of the Secured Liabilities.

The principal terms of the Deed of Guarantee are set out below:

Date

10 December 2024

Parties

(i) HPL, as guarantor; and
(ii) the Bank, as security agent.

Guarantee and undertaking:

HPL has absolutely, irrevocably and unconditionally agreed to provide guarantees to the Bank for the due and punctual performance of the Secured Liabilities by KPS under the Finance Documents.

HPL has also undertaken to the Bank (for and on behalf of the Secured Parties) that each time KPS does not make payment of any amount of the Secured Liabilities when due under or in connection with any Finance Document, HPL must immediately upon receiving written demand by the Bank (for and on behalf of the Secured Parties) pay that amount as if it was the principal obligor.

31 -

LETTER FROM THE BOARD

Indemnity:

As a separate, additional, continuing and primary obligation, HPL has unconditionally and irrevocably undertaken in favour of the Bank (for and on behalf of the Secured Parties) that, should the Secured Liabilities not be recoverable from HPL under the guarantee described above for any reason then, notwithstanding that it may have been known to the Bank, HPL shall immediately upon written demand by the Bank, make payment of the Secured Liabilities in the manner provided for in the Finance Documents, and HPL shall indemnify the Bank against all losses, claims, demands, penalties, actions, suits, damages, costs, charges and expenses and including legal costs on a full indemnity basis and liabilities whatsoever incurred or suffered by the Bank in relation to (a) the Facility Agreement, the Deed of Guarantee and/or the other Finance Documents and (b) by reason of any provision of the Finance Documents being or becoming void, unenforceable or otherwise invalid under any applicable law.

Effective period:

From the Effective Time to the date on which (i) no Obligor has any further actual or contingent obligation to make any payments to any of the Secured Parties under or pursuant to the terms of any of the Finance Documents and (ii) no Secured Party has any actual or contingent obligation or liability under or pursuant to the Finance Documents, or any of them, which will give rise to such an actual or contingent obligation of any Obligor.

NBSS Share Pledge

Pursuant to the Facility Agreement, and subject to obtaining the necessary regulatory approvals, Baoxin Special Steel, the Bank and KPS are expected to enter into the NBSS Share Pledge, in relation to, among other things, the pledging of its shares in KPS by Baoxin Special Steel in favour of the Bank in respect of the Secured Liabilities of the Obligors under the Finance Documents.

The principal terms of the NBSS Share Pledge are set out below:

Date

Subject to obtaining the necessary regulatory approvals, it is expected to be entered into by no later than six months after the date of the Facility Agreement.

LETTER FROM THE BOARD

Parties

(i) Baoxin Special Steel, as pledgor;
(ii) the Bank, as pledgee; and
(iii) KPS

Pledge:

In order to secure the full and punctual payment and performance of the Secured Liabilities by the Obligors, Baoxin Special Steel is expected to establish in favour of the Bank (for and on behalf of the Secured Parties) a first right of pledge on the shares (including any future shares) held by it in KPS. As at the Latest Practicable Date, Baoxin Special Steel holds 65% of the shareholding interest in KPS.

Effective period:

Subject to obtaining the necessary regulatory approvals, from the Effective Time, the NBSS Share Pledge is a continuing right and security for payment in full to the Bank of all the Secured Liabilities and the NBSS Share Pledge shall not be terminated, and the security created shall not be regarded as discharged or satisfied, until the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.

2. Receipt of Financial Assistance by the Group from TBP

TBP Share Pledge

On 10 December 2024, TBP, the Bank and KPS entered into the TBP Share Pledge, in relation to, among other things, the pledging of its shares in KPS by TBP in favour of the Bank in respect of the Secured Liabilities of the Obligors (including KPS) under the Finance Documents.

The principal terms of the TBP Share Pledge are set out below:

Date

10 December 2024

Parties

(i) TBP, as pledgor;
(ii) the Bank, as pledgee; and
(iii) KPS

LETTER FROM THE BOARD

Pledge:

In order to secure the full and punctual payment and performance of the Secured Liabilities by the Obligors, TBP has agreed to establish in favour of the Bank (for and on behalf of the Secured Parties) a first right of pledge on the shares (including any future shares) held by it in KPS. As at the Latest Practicable Date, TBP holds 35% of the shareholding interest in KPS.

Effective period:

From the Effective Time, the TBP Share Pledge is a continuing right and security for payment in full to the Bank of all the Secured Liabilities and the TBP Share Pledge shall not be terminated, and the security created thereunder shall not be regarded as discharged or satisfied, until the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.

Financial Information of KPS

Set out below is a summary of the audited financial information of the KPS for the two financial years ended 31 December 2022 and 31 December 2023, respectively:

	For the financial year ended 31 December 2022 (USD)	For the financial year ended 31 December 2023 (USD)
Revenue	/	/
Net profit (loss) after tax	(1,045,302)	(7,533,048)
	As at 31 December 2022 (USD)	As at 31 December 2023 (USD)
Total assets	58,619,378	366,383,954
Net assets	55,662,938	48,145,344

LETTER FROM THE BOARD

4. Reasons for and Benefits of the Financial Assistance

KPS is a non-wholly owned subsidiary of the Company and is principally engaged in phase II of the RKEF project. The provision of guarantee and security pursuant to the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge will help KPS raise funds to support project development and further improve its production capability and profitability, contributing to the overall strategy layout of the Group.

The Board, having taken into account that (i) KPS has a net book value of approximately USD2.47 million as of 31 December 2023 which is insufficient to cover the total indebtedness (including the principal amount and interests to be accrued) which may be incurred under the Facility Agreement; (ii) the typical securities package provided in favour of banks for similar lending transactions in Indonesia; (iii) KPS is operating a newly developed greenfield project which has yet to record profits in the past two financial years; and (iv) all shareholders of KPS are required to pledge its shares pursuant to the Facility Agreement, the Board consider it is fair and reasonable for the provision of the Deed of Guarantee, the TBP Share Pledge and the NBSS Share Pledge in order to secure term loan facility under the Facility Agreement.

In view of the above, the Board (excluding the independent non-executive Directors, whose views are set out in the letter from the Independent Board Committee) is of the view that the terms of the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

5. Implications under the Listing Rules

As of the Latest Practicable Date, HPL is a non-wholly owned subsidiary of the Company, directly and indirectly owned as to 54.9% by the Company and 45.1% by TBP; KPS is a non-wholly owned subsidiary of the Company, indirectly owned as to 65% by the Company and 35% by TBP. TBP is owned as to 86.45% by HJR, and HJR is ultimately controlled by family members of Ms. Lim. Ms. Lim is the de facto controller of Feng Yi Pte. Ltd., a 17% Shareholder of the Company. As such, Ms. Lim is indirectly interested in 17% of the shares of the Company and is a substantial Shareholder and connected person of the Company pursuant to Rule 14A.07(1) of the Listing Rules. Ms. Lim's family members are deemed connected persons of the Company pursuant to Rule 14A.21 of the Listing Rules. Accordingly, HJR is an associate of Ms. Lim and is a connected person of the Company pursuant to Rule 14A.07(4) of the Listing Rules, and TBP, being a subsidiary of HJR, is a connected person of the Company. As Ms. Lim's family members are collectively entitled to control the exercise of 10% or more of the votes attaching to the shares of HPL and KPS, each of HPL and KPS is a connected subsidiary of the Company pursuant to Rule 14A.16(1) of the Listing Rules.

Accordingly, the provision of financial assistance by the Group to KPS under each of the Deed of Guarantee and the NBSS Share Pledge, and the receipt of financial assistance by the Group from TBP under the TBP Share Pledge, constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

Provision of financial assistance to KPS under the Deed of Guarantee and the NBSS Share Pledge

Pursuant to Rule 14A.81 of the Listing Rules, a series of connected transactions will be aggregated and treated as if they were one transaction if they were entered into or completed within a 12-month period or are otherwise related. As the transactions under the Deed of Guarantee and the NBSS Share Pledge are proposed to be entered into within the same 12-month period and the financial assistance contemplated thereunder would be provided to the same connected subsidiary, they are aggregated and treated as if they were one transaction. As one or more of the applicable percentage ratios calculated on an aggregated basis exceeds 5%, the Deed of Guarantee, the NBSS Share Pledge and the transactions contemplated thereunder are subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

As KPS is a subsidiary of the Company, the provision of financial assistance to KPS under each of the Deed of Guarantee and the NBSS Share Pledge would not constitute notifiable transactions of the Company pursuant to Rule 14.04(1)(e)(ii) of the Listing Rules.

Receipt of financial assistance from TBP under the TBP Share Pledge

Reference is made to KPS Loan Announcement. As the KPS Loan and the TBP Share Pledge have been entered into within a 12-month period, were both entered into between the Group and associates of Ms. Lim, and are both of a similar nature (i.e.: financial assistance to the Group), the KPS Loan and the TBP Share Pledge are aggregated as if they were one transaction pursuant to Rule 14A.81 of the Listing Rules.

As one or more of the applicable percentage ratios calculated with reference to Rule 14.07 of the Listing Rules in respect of the TBP Share Pledge exceeds 5%, the TBP Share Pledge and the transaction contemplated thereunder are subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

Directors' Confirmation

None of the Directors has any material interest in each of the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder and hence no Director was required to abstain from voting on the relevant Board resolutions.

Information on the Group

The Group is principally engaged in business across the entire nickel industry value chain.

36 -

LETTER FROM THE BOARD

8. Information on the Parties Involved

KPS is a limited liability company established under the laws of Indonesia and is principally engaged in the operation of phase II of the RKEF project. Please refer to the Prospectus for further details. As at the Latest Practicable Date, KPS is indirectly held as to 65% by the Company through Baoxin Special Steel. The remaining shareholding interest of KPS is held as to 35% by TBP.

The Bank is a limited liability company established under the laws of Indonesia, whose shares are listed on the Indonesian Stock Exchange (stock code: NISP). It is primarily engaged in the provision of banking services in Indonesia, and is licensed and supervised by the Indonesian Financial Services Authority and Bank Indonesia. To the best of the Director's knowledge, information and belief having made all reasonable enquiries, the Bank and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

III. EGM AND PROXY ARRANGEMENTS

The notice of the EGM is set out on pages 83 to 85 of this circular. The EGM will be held on Monday, 13 January 2025 at 10:00 am at 10/F, Building C10, R&D Park, Lane 299, Guanghua Road, Yinzhou District, Ningbo City, Zhejiang Province, PRC, for the Shareholders to consider and, if thought fit, approve, amongst other things, (i) the DCM Shareholders Agreement and the transactions contemplated thereunder; (ii) the ONC Amendment Agreement and the transactions contemplated thereunder; (iii) the BBS Shareholders Agreement; (iv) the Deed of Guarantee; (v) the NBSS Share Pledge; and (vi) the TBP Share Pledge and the transactions contemplated thereunder.

LETTER FROM THE BOARD

Ms. Lim and her associates have material interests in the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder and will therefore be required to abstain from voting on the resolutions at the EGM. As at the Latest Practicable Date, Ms. Lim is the de facto controller of Feng Yi Pte. Ltd., a 17% Shareholder, and therefore indirectly holds or controls the voting rights in respect of 17% of the issued shares of the Company. Save as aforementioned, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, no other Shareholder has a material interest in the Connected JV Agreements and the transactions contemplated thereunder and therefore no other Shareholder is required to abstain from voting at the EGM for the relevant resolutions. Save for the above, no shareholders have any material interests in the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder.

A form of proxy for use by the Shareholders at the EGM is enclosed with this circular and published on the website of the Stock Exchange (www.hkexnews.hk). To be valid, the proxy form must be completed and signed in accordance with the instructions published thereon and return it to the Company's H share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 24 hours before the time appointed for the holding of the EGM (for the H Share Shareholders); or for the Unlisted Share Shareholders of the Company, to the business address of the Company in the PRC, at 10-11/F, Building C10, R&D Park, Lane 299, Guanghua Road, Yinzhou District, Ningbo City, Zhejiang Province, PRC not less than 24 hours before the time appointed for the holding of the EGM.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders at a general meeting must be taken by poll. On a poll, every Shareholder present or by proxy or (being a corporation) by its duly authorised representative shall have one vote for each Share registered in his/her/its name in the register of members of the Company. A Shareholder entitled to more than one vote needs not use all his/her/its votes or cast all the votes in the same manner.

IV. CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 8 January 2025 to Monday, 13 January 2025, both days inclusive. During such period, no transfer of the Company's H Shares will be registered. H Share Shareholders whose names appear on register of members of H Shares of the Company on Monday, 13 January 2025 will be entitled to attend the EGM. In order to be eligible to attend and vote at the EGM, H Share Shareholders whose transfers of Shares have not been registered shall deposit the transfer documents together with the relevant share certificates with the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Tuesday, 7 January 2025.

38 -

LETTER FROM THE BOARD

V. RECOMMENDATIONS

The Board (excluding the independent non-executive Directors, whose views are set out in the letter from the Independent Board Committee) considers that terms of each of the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder are in the ordinary and usual course of business of the Group, on normal commercial terms and are fair and reasonable, and the entering into each of the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge is in the interests of the Company and the Shareholders as a whole. Accordingly, the Board (including the Independent Board Committee) recommends the Independent Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM in relation to the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder.

Accordingly, the Board is of the view that the resolutions set out in the notice of the EGM are in the interests of the Company and the Shareholders as a whole and recommends that all Shareholders vote in favour of the relevant resolutions to be proposed at the EGM.

By order of the Board

Lygend Resources & Technology Co., Ltd.

CAI Jianyong

Chairman, General Manager

and Executive Director

39 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

力勤资源

LYGEND RESOURCES

Lygend Resources & Technology Co., Ltd.

宁波力勤资源科技股份有限公司

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

(Stock Code: 2245)

26 December 2024

To the Independent Shareholders

Dear Sir or Madam,

AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

We refer to the circular dated 26 December 2024 issued by the Company to the Shareholders (the "Circular") of which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used herein.

We have been appointed by the Board to form the Independent Board Committee to consider and advise the Independent Shareholders as to whether each of the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge is or will be entered into in the ordinary and usual course of business of the Group, and whether the terms of each of the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder are normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Grand Moore has been appointed to act as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Your attention is also drawn to (i) the letter from the Board, as set out at pages 11 to 39 of the Circular; and (ii) the letter from Grand Moore to the Independent Board Committee and the Independent Shareholders which contains its recommendations and the principal factors taken into account in arriving at the recommendations in respect of the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder, as set out at pages 42 to 69 of the Circular.

Having taken into account the terms of the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the advice from Grand Moore, we are of the opinion that the entering into of each of the Connected JV Agreements and the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge is or will be in the ordinary and usual course of business of the Group, the terms of each of the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder are normal commercial terms and are fair and reasonable, and the entering into of each of the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM in relation to the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder.

Yours faithfully,

The Independent Board Committee of

Lygend Resources & Technology Co., Ltd.

HE Wanpeng
Independent non-executive
Director

ZHANG Zhengping
Independent non-executive
Director

WANG James Jixian
Independent non-executive
Director

41 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter dated 26 December 2024 from Grand Moore, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder for the purpose of incorporation in this circular.

中毅资本有限公司
Grand Moore Capital Limited

21/F., No. 88 Lockhart Road,
Wan Chai, Hong Kong

26 December 2024

To the Independent Board Committee
and the Independent Shareholders of
Lygend Resources & Technology Co., Ltd.

Dear Sirs,

(1) MAJOR AND CONNECTED TRANSACTIONS IN RELATION
TO THE JV COMPANIES; AND
(2) CONNECTED TRANSACTIONS IN RELATION TO PROVISION
OF FINANCIAL ASSISTANCE TO A CONNECTED SUBSIDIARY
AND RECEIPT OF FINANCIAL ASSISTANCE
FROM A CONNECTED PERSON

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated under the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge, (the "Transactions"), the details of which are set forth in the "Letter from the Board" (the "Board Letter") contained in the circular issued by the Company to the Shareholders dated 26 December 2024 (the "Circular"), of which this letter forms apart. Unless the context otherwise requires, capitalised terms used in this letter shall have the same meanings as those defined in the Circular.

Major and connected transactions

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

On 28 October 2024, Baoxin Special Steel and HPL entered into the BBS Shareholders Agreement in relation to, among others, the establishment of a joint venture company, BBS.

Financial Assistance

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising Dr. HE Wanpeng, Ms. ZHANG Zhengping and Dr. WANG James Jixian, being all the independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the Transactions. We, Grand Moore Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Transactions.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OUR INDEPENDENCE

As at the Latest Practicable Date, we were not connected with the Company, Ningbo Lygend IPM, TBP, Lygend New Power, Li Yuen, Baoxin Special Steel, HPL, their respective substantial Shareholders, Directors or chief executives, or any of their respective associates and accordingly, are considered suitable to give independent advice to the Independent Board Committee and the Independent Shareholders in respect of the Transactions.

In the past two years, we have not acted as any financial adviser role to the Company but we have acted as an independent financial adviser to the independent board committee and the independent shareholders of the Company in connection with certain continuing connected transactions, the details of which are set out in the Company's circular dated 22 November 2024 (the "Previous Appointment"). Save for the current engagement as the Independent Financial Adviser and the Previous Appointment, there was no other relationship and/or engagement between the Company and us in the past two years.

With regards to our independence from the Company, it is noted that (i) apart from normal professional fees paid or payable to us in connection with the current appointment as the Independent Financial Adviser, no other arrangements exist whereby we had received or will receive any fees or benefits from the Company, its subsidiaries or their respective controlling Shareholders that could reasonably be regarded as relevant to our independence; and (ii) the aggregate professional fees paid or to be paid to us do not make up a significant portion of our revenue during the relevant period which would affect our independence. Accordingly, we consider that we are independent to act as the Independent Financial Adviser in respect of the Transactions pursuant to Rule 13.84 of the Listing Rules.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the Company's interim report for six months ended 30 June 2024 (the "2024 Interim Report"); (iii) the Prospectus; (iv) other information provided by the Directors and/or the senior management of the Company (the "Management"); (v) the opinions expressed by and the representations of the Directors and the Management; and (vi) our review of the relevant public information. We have assumed that all information and representations that have been provided by the Directors and the Management, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date, and should there be any material changes to our opinion after the Latest Practicable Date, Shareholders would be notified as soon as possible. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers, the Directors and/or the Management (where applicable), which have been provided to us. The Directors have

44 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

confirmed that, to the best of their knowledge, they believe that no material fact or information has been omitted from the information supplied to us and that the representations made or opinions expressed have been arrived at after due and careful consideration and there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading.

We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Chapters 13 and 14A of the Listing Rules. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information, opinions or representations given or made by or on behalf of the Company, nor conducted any independent in-depth investigation into the business affairs, assets and liabilities or future prospects of the Company, Ningbo Lygend IPM, TBP, Lygend New Power, Li Yuen, Baoxin Special Steel, HPL, their respective subsidiaries or associates (if applicable) or any of the other parties involved in the Transactions, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Transactions. The Company has been separately advised by its own professional advisers with respect to the Transactions and the preparation of the Circular (other than this letter).

We have assumed that the Transactions will be consummated in accordance with the terms and conditions set forth in the Circular without any waiver, amendment, addition or delay of any terms or conditions. We have assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents as required for the Transactions, no delay, limitation, condition or restriction will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived from the Transactions. In addition, our opinion is necessarily based on the financial, market, economic, industry-specific and other conditions as they existed on, and the information made available to us as at the Latest Practicable Date.

In the event of inconsistency, the English text of this letter shall prevail over the Chinese translation of this letter.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation in relation to the Transactions, we have taken into account the following principal factors and reasons:

1. Background Information of the Group

As per the 2024 Interim Report, the operating segments of the Group includes (i) nickel products trading; (ii) nickel products production; (iii) equipment manufacturing and sales and (iv) the "others" segment comprises, the sales of ancillary materials. Set out below is the key consolidated financial information of the Group for the six months ended 30 June 2023 and 2024 as extracted from the 2024 Interim Report.

| | For the six months ended
30 June | |
| --- | --- | --- |
| | 2024
RMB'000
(Unaudited) | 2023
RMB'000
(Unaudited) |
| Revenue | 10,877,988 | 9,284,106 |
| Gross Profit | 1,827,444 | 1,567,404 |
| Profit for the period | 970,381 | 662,024 |

Revenue of the Group amounted to approximately RMB10,877,988,000 for the six months ended 30 June 2024 which represents an increment of approximately RMB1,593,882,000, or approximately 17.2%, from approximately RMB9,284,106,000 for the six months ended 30 June 2023. The 2024 Interim Report carries on to explain that the increment in revenue was primarily due to the increase in revenue generated from the Group's nickel product trading business from approximately RMB4,879,374,000 for the six months ended 30 June 2023 to approximately RMB6,116,648,000 for the six months ended 30 June 2024 which was mainly due to the HJF project reaching full production capacity and the increase in procurement and sales of trading of ferronickel resulting in an increase in revenue of RMB1,592.2 million from the trading of ferronickel.

Gross profit of the Group amounted to approximately RMB1,827,444,000 for the six months ended 30 June 2024 which represents an increase of approximately RMB260,040,000, or approximately 16.6%, from approximately RMB1,567,404,000 for the six months ended 30 June 2023. The gross profit margin remained relatively stable at approximately 16.8% and 16.9% for the six months ended 30 June 2024 and 2023, respectively.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Profit of the Group amounted to approximately RMB970,381,000 for the six months ended 30 June 2024 which represents an increase of approximately RMB308,357,000, or approximately 46.6%, from approximately RMB662,024,000 for the six months ended 30 June 2023. Such increase was mainly attributable to the increase in gross profit driven by the increase in sales volume of trading of ferronickel and self-produced nickel-cobalt compounds, as well as the decrease in other operating expenses.

Set out below are certain key consolidated financial information of the Group as extracted from the consolidated balance sheet set out in the 2024 Interim Report.

	As at
	30 June 2024	31 December 2023
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Total assets	34,882,402	30,679,708
Total liabilities	19,694,796	17,194,358
Equity attributable to owners of the parent	9,538,020	9,185,546
Cash and cash equivalents	3,958,055	4,616,829

The total assets of the Group amounted to approximately RMB34,882,402,000 as at 30 June 2024, representing an increase of approximately RMB4,202,694,000 or approximately 13.7%, as compared to RMB30,679,708,000 as at 31 December 2023. The increase was primarily due to the increase in (i) property, plant and equipment, from approximately RMB16,970,830,000 as at 31 December 2023 to approximately RMB19,629,458,000 as at 30 June 2024; (ii) trade and bills receivables, from approximately RMB1,022,951,000 as at 31 December 2023 to approximately RMB2,105,170,000 as at 30 June 2024; and (iii) prepayments, other receivables and other assets, from approximately RMB1,145,178,000 as at 31 December 2023 to approximately RMB1,998,171,000 as at 30 June 2024.

The total liabilities of the Group amounted to approximately RMB19,694,796,000 as at 30 June 2024, representing an increase of approximately RMB2,500,438,000 or approximately 14.5%, as compared to RMB17,194,358,000 as at 31 December 2023. The increase was primarily due to the increase in (i) interest-bearing bank and other borrowings under current liabilities, from approximately RMB4,692,395,000 as at 31 December 2023 to approximately RMB7,347,842,000 as at 30 June 2024; and (ii) trade and bills payables, from approximately RMB1,249,276,000 as at 31 December 2023 to approximately RMB1,766,225,000 as at 30 June 2024, and partially offset by the decrease in (i) the amount due to related parties, from approximately RMB1,044,215,000 as at 31 December 2023 to approximately RMB891,575,000 as at 30 June 2024; and (ii) other payables and accruals, from approximately RMB2,282,073,000 as at 31 December 2023 to approximately RMB1,799,080,000 as at 30 June 2024.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group's equity attributable to owners of the parent increased from approximately RMB9,185,546,000 as at 31 December 2023 to approximately RMB9,538,020,000 as at 30 June 2024, representing an increase of approximately RMB352,474,000 or approximately 3.8%. The 2024 Interim Report attributes the increase in the Group's equity to the net profit during the six months ended 30 June 2024. The cash and cash equivalents of the Group amounted to approximately RMB3,958,055,000 as at 30 June 2024, representing a decrease of approximately RMB658,774,000 or 14.3% as compared to approximately RMB4,616,829,000 as at 31 December 2023.

2. Major and connected transactions

2.1 Capital contribution to DCM

Reference is made to the Prospectus in relation to, among others, the Old DCM Shareholders Agreement.

2.1.1 Principal terms of the DCM Shareholders Agreement

The principal terms of the DCM Shareholders Agreement are set out below:

Date

28 October 2024

Parties

(i) Ningbo Lygend IPM; and
(ii) TBP (each a "DCM Party", and collectively "DCM Parties")

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Capital increase and shareholding structure

Pursuant to the DCM Shareholders Agreement, the DCM Parties agreed to increase the capital commitment by an IDR equivalent of USD51,620,000 in total. As set out in the section headed "Reasons for and Benefits of the DCM Shareholders Agreement" in section 2.1.2 below, the reason for the increase in the capital commitment is to allow DCM to construct and operate additional facilities. Of the increase in capital commitment, (i) USD18,067,000, representing 35% of the total capital commitment, will be injected by the DCM Parties in proportion to their respective shareholding upon the approval of the Independent Shareholders; and (ii) USD33,553,000, representing 65% of the total capital commitment, will be injected by the DCM Parties in proportion to the DCM Parties' respective shareholding in compliance with the applicable laws (including obtaining the relevant PRC ODI approvals), and as and when DCM's funding needs arise in its construction and operation of the additional facilities, including as and when funding needs arise when DCM begins undertaking preparatory work on the construction of the additional facilities (including hiring the relevant additional personnel, acquiring additional plant and equipment). It is currently expected that the entire amount of the capital injection under the DCM Shareholders Agreement will be completed before or around the end of 2026.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Future Funding

If DCM needs additional capital to maintain or expand its business, the DCM Parties agree that DCM shall raise future funding based on the following order of priority:

(b) next, from borrowings from the DCM Shareholders pro rata to their respective shareholding percentage in DCM; and

DCM Board of Directors

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

DCM Board of Commissioners

Please refer to the Board Letter for other principal terms of the DCM Shareholders Agreement.

2.1.2 Reasons for and benefits of the DCM Shareholders Agreement

As disclosed in the Board Letter, DCM is responsible for the operation of the industrial park in Obi Island. Given the continuous development of the Obi projects which will result in an increase in deployment of human capital, the Group envisages a need for additional facilities to support the staff who are involved in the Obi projects. Accordingly, the capital injected into DCM will be used for the construction and operation of supporting public auxiliary facilities, such as staff dormitories and canteens, in the industrial park on the Obi Island, which will help to further reduce the operating costs of the Group, increase the profitability and operational efficiency of the Group, and enhance the comprehensive risk resistance ability of the Group.

The Directors are of the view that the terms of the DCM Shareholders Agreement and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.1.3 Our analysis

For due diligence purpose, we enquired and obtained from the Management DCM’s capital expenditure budgeting (which is included in the Ningbo Lygend IPM Report (as defined below)) and we understand that capital injected into DCM will be used for the construction and operation of supporting public auxiliary facilities, including, among other things, (i) staff dormitories and canteens; (ii) sewage plant, water purification plant and water pipes; (iii) road pavement; (iv) electricity supply; and (v) concrete mixing station, in the industrial park on the Obi Island, and the construction works are expected to complete by the end of the year 2026. These public auxiliary facilities are essential to support the development on the Obi Projects. We further enquired the Management the basis of choosing suppliers, and noted from an internal report prepared by Ningbo Lygend IPM (the “Ningbo Lygend IPM Report”) that DCM will procure all the main equipment and materials by way of public tender to ensure fairness and reasonableness of the price of equipment and materials. For general and common equipment and materials, DCM will obtain quotations from suppliers. For rare, unique or specific equipment and materials, DCM will directly negotiate with the suppliers. In any event, the qualification of the suppliers and quality of all the equipment and materials will be strictly safeguarded by, among others, procurement managers, procurement engineers and examination engineers.

Having reviewed the terms of the DCM Shareholders Agreement, discussed with the Management and reviewed the Ningbo Lygend IPM Report provided by the Management, we note that:

(i) the capital injected into DCM will be used for the construction and operation of supporting public auxiliary facilities, such as staff dormitories and canteens, in the industrial park on the Obi Island. As the Obi project is and will continue to progress, funding is necessary for the operator of the industrial park in Obi Island, i.e. DCM, to support the staff who are and will be involved in the Obi projects. As discussed immediately above, the new public auxiliary facilities to be constructed by DCM is essential to support the development on the Obi projects, and DCM’s equipment and materials procurements procedures are considered fair and reasonable to control expense and safeguard the quality of the equipment and materials to be procured;

(ii) the capital injected by the DCM Parties is in proportion to their respective shareholding upon the approval of the Independent Shareholders, and Ningbo Lygend IPM is currently and will continue to be able to exercise 60% of the voting rights in DCM;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) If DCM needs additional capital to maintain or expand its business, the future funding mechanism as stipulated in the DCM Shareholders Agreement ensures that the DCM Parties will inject capital by way of borrowings or equity contribution in proportion to their pro rata shareholding in DCM, and, in the event any DCM Party cannot or is not willing to contribute in any future funding, the other DCM Party is able to, but not obliged to, increase their proportion of shareholding in DCM by making additional fundings in exchange for new shares of DCM. The aforementioned arrangement is considered on normal commercial terms and is fair and reasonable;

(iv) Despite that TBP shall have the right to nominate the President Director, the President Director will not have any special powers, such as veto rights, on the DCM Board of Directors. Accordingly, Ningbo Lygend IPM, who shall have the right to nominate a total of three directors out of five members in the DCM Board of Directors, could control majority of votes casted in the DCM Board of Directors; and

(v) Ningbo Lygend IPM shall have the right to nominate a total of two commissioners, including the President Commissioner, out of three members in the DCM Board of Commissioners, which means that Ningbo Lygend IPM could have stronger influence in supervising management policies of DCM and the course of management in general regarding DCM's business carried out by the DCM Board of Directors.

Having considered the above, we are of the opinion that (i) the entering into of the DCM Shareholders Agreement is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the DCM Shareholders Agreement are on normal commercial terms and are fair and reasonableness so far as the Company and the Shareholders as a whole.

2.2 Capital contribution to ONC

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.2.1 Principal terms of the ONC Amendment Agreement

The principal terms of the ONC Amendment Agreement are set out below:

Date

28 October 2024

Parties

(i) Lygend New Power;
(ii) TBP; and
(iii) Li Yuen (each a “ONC Party”, and collectively “ONC Parties”)

Capital Increase and Shareholding Structure

Pursuant to the ONC Amendment Agreement, the ONC Parties agree to increase the capital commitment by a total of USD466,000,000. It is intended that prior to the increase in capital commitment, ONC will undertake an increase in authorised share capital in accordance with Indonesian law, to an amount of approximately IDR13,961,026,187,400.

As set out in the section headed “Reasons for and Benefits of the ONC Amendment Agreement” in section 2.2.2 below, the reason for the increase in the capital commitment is to allow ONC to expand its product mix. The ONC parties will inject the additional capital commitment in proportion to their respective shareholding in compliance with the applicable laws (including obtaining the relevant PRC ODI approvals), and as and when ONC’s funding needs arise in its expansion of its product mix, including as and when funding needs arise when ONC begins undertaking preparatory work on the expansion of its product mix (including hiring the relevant additional personnel, acquiring additional plant and equipment). It is currently expected that the entire amount of the capital injection under the ONC Amendment Agreement will, subject to the timing of obtaining the ODI approval and the construction progress, be completed before or around the end of 2027.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.2.2 Reasons for and benefits of the ONC Amendment Agreement

As stated in the Board Letter, ONC is the project company of phase III of the HPAL project. To enable the Group to adapt to diversified market demands, the Group is considering modifying its product mix to include nickel products which have gone through the purification process. Accordingly, the increase in capital commitment will provide capital for ONC to carry out additional processes to purify the nickel products of the Group and thereby diversifying the Group's product matrix. The diversification of the Group's product mix is expected to result in long-term sustainable growth based on achieving economies of scale, reduction of the Group's dependence of the rare metal industry in foreign countries, and safeguarding of the development of the national nickel industry.

The Directors are of the view that the terms of the ONC Amendment Agreement and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.2.3 Our analysis

For due diligence purpose, we enquired and obtained from the Management ONC’s capital expenditure budgeting and we note that the capital injection will be used for initial working capital, construction and engineering, equipment acquisition and installation fee and other engineering construction costs in the MHP nickel refining project, which is expected to have a construction period of around 28 months. Full production capacity is expected to achieve two years after completion of the construction period, and the annual production amounts to 50,000 metal tons of nickel cathode and 5,000 metal tons of cobalt cathode. We enquired and the Management advised that ONC will procure major equipment and facilities through public tender to control investment costs, and for the other common and general equipment and facilities, ONC will procure through quotation from and comparison among various independent third party suppliers.

Having reviewed the Prospectus, the terms of the ONC Amendment Agreement, discussed with the Management and reviewed ONC’s capital expenditure budgeting provided by the Management, we note that:

(i) MHP plays an important role for producing nickel and cobalt-rich batter cathodes, which are essential for lithium-ion batteries used in electric vehicles. As discussed in the Industry Overview section of the Prospectus, the new energy vehicle sales volume in China is expected to increase from 3.3 million units in the year 2021 to 10.2 million units in the year 2026, and the power battery installed volume in China is expected to increase from 154.5 GWh in 2021 to 611.9 GWh in the year 2026;

(ii) as discussed above, ONC’s equipment and materials procurements procedures are considered fair and reasonable to control expense and safeguard the quality of the equipment and materials to be procured;

(iii) increase in capital commitment to ONC, the project company of phase III of the HPAL project, will be used to (i) construct factory buildings on existing land resources; and (ii) purchase major equipment and construct an MHP nickel refining project. Expected annual production upon full production capacity amounts to 50,000 metal tons of nickel cathode and 5,000 metal tons of cobalt cathode, which will create a new revenue stream to the Group and enhance the Group’s profitability; and

(iv) the capital injected by the ONC Parties is in proportion to their respective shareholding upon the approval of the Independent Shareholders, and Lygend New Power is currently and will continue to be able to exercise 60% of the voting rights in ONC.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered the above, we are of the opinion that (i) the entering into of the ONC Amendment Agreement is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the ONC Amendment Agreement are on normal commercial terms and are fair and reasonableness so far as the Company and the Shareholders as a whole.

2.3 Establishment of BBS

On 28 October 2024, Baoxin Special Steel and HPL entered into the BBS Shareholders Agreement in relation to, among others, the establishment of a joint venture company, BBS. Pursuant to the BBS Shareholders Agreement, the initial investment amount of BBS is an IDR equivalent of USD505,000,000, which the BBS Parties will inject in proportion to their respective shareholding in BBS, being 5.76% to be held by Baoxin Special Steel and 94.24% to be held by HPL.

2.3.1 Principal terms of the BBS Shareholders Agreement

The principal terms of the BBS Shareholders Agreement are set out below:

Date

28 October 2024

Parties

(i) Baoxin Special Steel; and
(ii) HPL (each a “BBS Party”, and collectively “BBS Parties”)

Shareholding Structure

Pursuant to the BBS Shareholders Agreement, the BBS Parties agreed that the initial authorized capital of BBS upon its incorporation shall be IDR89,244,000,000 (equivalent to USD5,669,886). It is intended that prior to the investment of the initial investment amount, BBS will undertake an increase in authorized share capital, to an amount of approximately IDR7,948,699,495,000.

As set out in the section headed “Reasons for and Benefits of the BBS Shareholders Agreement” in section 2.3.2 below, the reason for the establishment of BBS and the injection of the initial investment amount is to build and run a HPAL smelting slag treatment plant in Obi Island. Of the initial authorised share capital amount, IDR22,311,000,000 (equivalent to USD1,417,472), representing 25% of the authorized capital of BBS shall be paid up by the BBS Parties. The remaining non-paid-up authorized capital will be subscribed, and the initial investment amount will be injected thereafter, in proportion to the BBS Parties’ respective shareholding

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BBS Board of Directors

The BBS Board of Directors shall consist of one member of whom shall be the President Director nominated by HPL.

BBS Board of Commissioners

The BBS Board of Commissioners shall consist of one member of whom shall be the commissioner nominated by the Company.

Please refer to the Board Letter for other principal terms of the BBS Shareholders Agreement.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Future Funding

If BBS needs additional capital to maintain or expand its business, the BBS Parties agree that BBS shall raise future funding based on the following order of priority:

(b) next, from BBS’ borrowings from the BBS Shareholders pro rata to their respective shareholding percentage in BBS; or

2.3.2 Reasons for and benefits of the BBS Shareholders Agreement

As stated in the Board Letter, the BBS Parties intend to establish BBS with the aim to build and run a HPAL smelting slag treatment plant in Obi Island with an annual treatment of 1,340,000 metric tons of HPAL smelting slags together with a slag warehouse and other ancillary facilities. The establishment of BBS will enable the Group to, in line with the principle of environmental protection, reduce wastage and effectively utilise resources. Further, given that the budget for infrastructure in Indonesia is constantly increasing and demand for HPAL smelting slag treatment is expected to correspondingly increase, the business of BBS will create new sources of income and enhance the Group’s profitability.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors are of the view that the terms of the BBS Shareholders Agreement and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

2.3.3 Our analysis

For our due diligence purpose, we enquired and obtained BBS’s capital expenditure budgeting, and note that the construction project of the HPAL smelting slag treatment plant is expected to last for around 18 months. We note from BBS’s capital expenditure budgeting that the initial investment amount of USD505 million will be used for initial working capital, construction and engineering, equipment acquisition and installation fee and other engineering construction costs. Production is expected to commence one year after completion of the construction project, and production will reach full capacity commencing three years after completion of the construction project, and the expected annual production amounts to 700 thousand tons of steel. We enquired and the Management advised that BBS will procure major equipment and facilities through public tender to control investment costs, and for the other common and general equipment and facilities, BBS will procure through quotation from and comparison among various independent third party suppliers.

Having reviewed the terms of the BBS Shareholders Agreement, discussed with the Management and reviewed BBS’s capital expenditure budgeting provided by the Management, we note that:

(i) the establishment of BBS is to build and run a HPAL smelting slag treatment plant in Obi Island with an annual treatment of 1,340,000 metric tons of HPAL smelting slags together with a slag warehouse and other ancillary facilities. Expected annual production upon full production capacity amounts to 700 thousand tons of steel. Accordingly, the slag treatment business of BBS will on one hand be socially and environmentally responsible, while commercially create new revenue stream to the Group through sale of steel and enhance the Group’s profitability;

(ii) as discussed above, BBS’s equipment and materials procurements procedures are considered fair and reasonable to control expense and safeguard the quality of the equipment and materials to be procured;

(iii) the capital injected by the BBS Parties is in proportion to their respective shareholding upon the approval of the Independent Shareholders, and HPL will be able to exercise 94.24% of the voting rights in BBS, BBS will be a subsidiary of the Group and the financial results of BBS will be consolidated into the consolidated statements of the Group;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iv) If BBS needs additional capital to maintain or expand its business, the future funding mechanism as stipulated in the BBS Shareholders Agreement ensures that the BBS Parties will inject capital by way of borrowings or equity contribution in proportion to their pro rata shareholding in BBS, and, in the event any BBS Party cannot or is not willing to contribute in any future funding, the other BBS Party is able to, but not obliged to, increase their proportion of shareholding in BBS by making additional fundings in exchange for new shares of BBS. The aforementioned arrangement is considered on normal commercial terms and is fair and reasonable;

(v) HPL shall have the right to nominate the only member in the BBS Board of Directors, which means that HPL could control BBS Board of Directors; and

(vi) the Company shall have the right to nominate the only commissioner in the BBS Board of Commissioners, which means that HPL could have sole influence in supervising management policies of BBS and the course of management in general regarding BBS's business carried out by the BBS Board of Directors.

Having considered the above, we are of the opinion that (i) the entering into of the BBS Shareholders Agreement is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the BBS Shareholders Agreement are on normal commercial terms and are fair and reasonableness so far as the Company and the Shareholders as a whole.

3. Financial Assistance

As stated in the Board Letter, on 9 December 2024, KPS entered into the Facility Agreement, pursuant to which the lenders have agreed to make available a term loan facility of up to USD250,000,000 to KPS for the purpose of financing the development and construction of a large-scale ferronickel smelter project located at Obi Island of Indonesia by KPS as part of phase II of the RKEF project to increase the production capacity of the Group, subject to the terms and conditions set out in the Facility Agreement.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, each of the lenders is an Independent Third Party of the Group.

It is a condition precedent to the first utilisation under the Facility Agreement that, among other things, the Deed of Guarantee, and the TBP Share Pledge be entered into by the relevant parties to secure the full and punctual payment and performance of the Secured Liabilities. In addition, it is a condition subsequent under the Facility Agreement that the NBSS Share Pledge will be entered into by relevant parties after getting necessary regulatory approvals to secure the full and punctual payment and performance of the Secured Liabilities.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Facility Agreement

Date

9 December 2024

Parties

(i) KPS;
(ii) The Bank, as the facility agent and
(iii) Oversea-Chinese Banking Corporation Limited, as coordinating bank.

Facility

Term of Facility

Subject to the terms of the Facility Agreement, for an initial term of 12 months from the date of the Facility Agreement

Interest

3.1 Provision of Financial Assistance by the Group to KPS

3.1.1 Deed of Guarantee

On 10 December 2024, HPL and the Bank entered into the Deed of Guarantee, in relation to, among other things, the provision of a guarantee by HPL in favour of the Banks in respect of the Secured Liabilities.

The principal terms of the Deed of Guarantee are set out below:

Date

10 December 2024

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Parties

(i) HPL, as guarantor; and
(ii) the Bank, as security agent.

Guarantee and undertaking:

HPL has absolutely, irrevocably and unconditionally agreed to provide guarantees to the Bank for the due and punctual performance of the Secured Liabilities by KPS under the Finance Documents.

HPL has also undertaken undertakes to the Bank (for and on behalf of the Secured Parties) that each time KPS does not make payment of any amount of the Secured Liabilities when due under or in connection with any Finance Document, HPL must immediately upon receiving written demand by the Bank (for and on behalf of the Secured Parties) pay that amount as if it was the principal obligor.

Indemnity:

Effective period:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.1.2 NBSS Share Pledge

The principal terms of the NBSS Share Pledge are set out below:

Date

Subject to obtaining the necessary regulatory approvals, it is expected to be entered into by no later than six months after the date of Facility Agreement.

Parties

(i) Baoxin Special Steel, as pledger;
(ii) the Bank, as pledgee; and
(iii) KPS

Pledge:

Effective period:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.2 Receipt of Financial Assistance by the Group from TBP

3.2.1 TBP Share Pledge

The principal terms of the TBP Share Pledge are set out below:

Date

10 December 2024

Parties

(i) TBP, as pledger;
(ii) the Bank, as pledgee; and
(iii) KPS

Pledge:

Effective period:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.3 Reasons for and Benefits of the Financial Assistance

KPS is a non-wholly owned subsidiary of the Company and is principally engaged in phase II of the RKEF project. The provision of guarantee and security pursuant to the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge will help KPS raise funds to support its daily business operations and project development and further improve its production capability and profitability, contributing to the overall strategy layout of the Group.

In view of the above, the Board is of the view that the terms of the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder are on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3.4 Financial Information of KPS

Set out below is a summary of the audited financial information of the KPS for the two financial years ended 31 December 2022 and 31 December 2023, respectively:

	For the financial year ended 31 December 2022 (USD)	For the financial year ended 31 December 2023 (USD)
Revenue	/	/
Net profit (loss) after tax	(1,054,302)	(7,533,048)
	As at 31 December 2022 (USD)	As at 31 December 2023 (USD)
Total assets	58,619,378	366,383,954
Net assets	55,662,938	48,145,344

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.5 Our Analysis

3.5.1 Our view on the reasonableness of Financial Assistance

The Group produces ferronickel using the Rotary Kiln-Electric Furnace process, the mainstream process for nickel pyrometallurgy. HJF is the project company of phase I of the RKEF project, while KPS is the project company of phase II of the RKEF project.

As disclosed in the 2024 Interim Report, revenue from ferronickel trading and ferronickel production amounted to approximately RMB4.8 billion and RMB572.6 million respectively, representing approximately 44.3% and 5.3% respectively. We also note from the 2024 Interim Report that phase I of the RKEF project operated by HJF reached full capacity during first half of 2024, leading to growth in revenue, gross profit and net profit in first half of 2024 as compared to first half of 2023. The Management also advised that, phase II of the RKEF project operated by KPS will start operation by early 2025.

KPS is an 65% non-wholly owned subsidiary of the Company. Accordingly, we are of the view that the RKEF project is an important project of the Group, and the development and operation of KPS is important to the Group's overall profitability.

The purpose of entering into the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge is solely to support KPS to obtain term loan facility of up to USD250,000,000 pursuant to the Facility Agreement, which will be applied to, among other things, financing the construction, commissioning and completion of, phase II of the RKEF project operated by KPS.

For due diligence purpose, we enquired the Management and reviewed the expected capital expenditure of KPS in the year 2025, and understand that, one production line of phase II of the RKEF project operated by KPS will start operation by early 2025, while other production lines are still under construction. The capital expenditure of KPS for equipment procurement and construction of production lines will still be significant in the year 2025, and the expected monetary amount demanded for capital expenditure of KPS in the year 2025 exceeds the amount of USD250 million under the Facility Agreement.

Given the importance of the RKEF project to the Group's operation and profitability, we consider that the entering into of the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge to facilitate the Facility Agreement is conducted in the ordinary and usual course of the business of the Group, and is in the interest of the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.5.2 Our view on the terms of the principal terms of the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge

In order to secure the full and punctual payment and performance of the Secured Liabilities by the Obligors, NBSS is expected to establish, and TBP has agreed to establish, in favour of the Bank (for and on behalf of the Secured Parties) a first right of pledge on the shares (including any future shares) held by each of NBSS and TBP in KPS. Accordingly, all KPS shareholders will pledge/has pledged their respective shares in KPS to the Bank. We enquired the Management the reason for entering into the NBSS Share Pledge and the TBP Share Pledge in addition to the Deed of Guarantee (which has already provided absolute guarantees to the Bank for the due and punctual performance of the Secured Liabilities) and were advised that it is a common practice of banks in Indonesia to request share pledge from borrowers' shareholders and it is understood and accepted by the Management. We have enquired and obtained the latest unaudited cash balance and current assets balance of HPL as at 30 November 2024, and note that both figures exceed the amount of USD250 million under the Facility Agreement (i.e. the exposure of HPL pursuant to the Deed of Guarantee). On the other hand, one production line of phase II of the RKEF project operated by KPS will start operation by early 2025, and KPS itself will start to have revenue and cash inflow since then. Accordingly, we are in the opinion that HPL's financial position is sufficient to discharge the obligation under the Secured Liabilities in the event of late payment/default, and the risk of transferring the equity interest of KPS to the Bank pursuant to the NBSS Share Pledge and TBP Share Pledge is believed to be remote.

We discussed with the Management and understand that after arms' length negotiation with the Bank, absolute guarantee provided by HPL, being a fellow subsidiary of KPS (but not the shareholder of KPS), is acceptable to the Bank. Pursuant to the Deed of Guarantee, HPL will provide absolute guarantee for the loan to KPS under the Facility Agreement. As HPL is indirectly owned as to 54.9% by the Company and 45.1% by TBP, while the KPS (being the subject borrower) is indirectly owned as to 65% by the Company and 35% by TBP, the absolute guarantee to be provided by HPL creates comparatively less exposure to the Group in the event of default of the Secured Liabilities, which is beneficial to the Group.

Given the above, we consider the terms of the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge to be fair and reasonable.

4. Information of the Group and the parties involved under the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge

Please refer to the Board Letter.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. Conclusion

5.1 Major and connected transactions

Having considered the analysis in sections 2.1.3, 2.2.3 and 2.3.3 above, we are of the opinion that (i) the entering into of the DCM Shareholders Agreement, the ONC Amendment Agreement and the BBS Shareholders Agreement is in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the DCM Shareholders Agreement, the ONC Amendment Agreement and the BBS Shareholders Agreement are on normal commercial terms and are fair and reasonable so far as the Company and the Shareholders as a whole.

5.2 Financial Assistance

Having considered the analysis in sections 3.5.1 and 3.5.2 above, we are of the opinion that (i) the entering into of the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge is on normal commercial terms and in the interests of the Company and the Shareholders as a whole; and (ii) the terms of Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge are on normal commercial terms and are fair and reasonable so far as the Company and the Shareholders as a whole.

OPINION AND RECOMMENDATION

Having considered the principal factors and reasons discussed above, we are of the view that (i) the Connected JV Agreements are in the ordinary and usual course of business, are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole; and (ii) the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder are in the ordinary and usual course of business, are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Therefore, we would recommend (i) the Independent Board Committee to advise the Independent Shareholders; and (ii) the Independent Shareholders, to vote in favor of the ordinary resolution(s) to approve the Connected JV Agreements, the Deed of Guarantee, the NBSS Share Pledge and the TBP Share Pledge and the transactions contemplated thereunder at the EGM.

Yours faithfully,

For and on behalf of

Grand Moore Capital Limited

Florence Ng

Associate Director

Note:

Ms. Florence Ng is a licensed person under the SFO to undertake type 6 regulated activity (advising on corporate finance) and is a responsible officer in respect of Grand Moore Capital Limited's type 6 regulated activity (advising on corporate finance). Ms. Ng has over 10 years of experience in the corporate finance industry in Hong Kong.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for the three years ended 31 December 2023 and the six months ended 30 June 2024 are disclosed in the following documents which have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.lygend.com):

(i) Prospectus of the Company dated 21 November 2022 https://www1.hkexnews.hk/listedco/listconews/sehk/2022/1121/2022112100005.pdf
(ii) Annual Report of the Company for the year ended 31 December 2022 https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0426/2023042603037.pdf
(iii) Annual Report of the Company for the year ended 31 December 2023 https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0429/2024042901286.pdf
(iv) Interim Report of the Company for the six months ended 30 June 2024 https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0920/2024092000403.pdf

2. FINANCIAL EFFECTS ON THE EARNINGS, ASSETS AND LIABILITIES OF THE GROUP

Upon completion of the capital contribution to DCM, DCM will remain as a subsidiary of the Group and will continue to be consolidated into the consolidated financial statements of the Group. It is expected that the total assets of the Group will be increased by USD20,648,000, being the total contribution to be made by TBP, upon completion of the capital contribution to DCM but there will be no impact on earnings and liabilities.

Upon completion of the capital contribution to ONC, ONC will remain as a subsidiary of the Group and will continue to be consolidated into the consolidated financial statements of the Group. It is expected that the total assets of the Group will be increased by USD186,400,000, being the total contribution made by Li Yuen and TBP, upon completion of the capital contribution to ONC but there will be no impact on earnings and liabilities.

Upon establishment of BBS, the Company will be interested in 57.5% of the equity interests in BBS. Accordingly, BBS will be accounted for as a subsidiary of the Group and its financial results will be consolidated into the consolidated financial statements of the Group. The formation of BBS will not affect the earnings, assets and liabilities of the Group.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. STATEMENT OF INDEBTEDNESS

At the close of business on 31 October 2024, being the latest practicable date for the purpose of preparing this statement of indebtedness prior to the printing of this circular, the indebtedness of the Group was as set out below. As at 31 October 2024, the Group had unutilized banking facilities of approximately RMB1,590.5 million.

Borrowings

At the close of business on 31 October 2024, the Group had the following borrowings or indebtedness in the nature of borrowing:

	Note	As at 31 October 2024 RMB'000 (Unaudited)
Current borrowings
Interest-bearing bank borrowing - secured		6,590,783
Interest-bearing bank borrowing - unsecured		1,439,983
Lease liabilities	(a)	10,548
Amounts due to TBP		37,979
Non-current borrowings
Interest-bearing bank borrowing - secured		6,173,669
Interest-bearing bank borrowing - unsecured		100,000
Lease liabilities	(a)	10,313
Amounts due to TBP		57,414
Total borrowings		14,420,689

Note:
(a) These lease liabilities mainly relate to lease arrangements of buildings.

Certain of our borrowings are secured by (i) mortgages over our buildings and land in the PRC and Indonesia; (ii) mortgages over our land use rights located in the PRC; (iii) mortgages over our plant and machinery, electronic and office equipment, motor vehicles and buildings under construction located in Indonesia; (iv) pledges of deposits; or (v) pledges of the Group's and related parties' shareholdings.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Guarantees

As at the close of business on 31 October 2024, the Company had entered into an agreement to guarantee 12% of the bank borrowings made to HONGKONG CBL Limited, a company controlled by the Company's associate, Contemporary Brunp Lygend Co., Ltd. ("CBL"), with a guaranteed amount of RMB214,879,014. Said bank borrowings were also jointly guaranteed by other shareholders of CBL.

Save as aforesaid, the Group did not, at the close of business on 31 October 2024, have any other material outstanding (i) debt securities, whether issued and outstanding, authorised or otherwise created but unissued, or term loans, whether guaranteed, unguaranteed, secured (whether the security is provided by the Group or by third parties) or unsecured; (ii) other borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments, whether guaranteed, unguaranteed, secured or unsecured; (iii) mortgages or charges; or (iv) contingent liabilities or guarantees.

4. SUFFICIENCY OF WORKING CAPITAL

The Directors are of the opinion that, after taking into account the effects of the Connected JV Agreements, the internally generated funds, existing facilities available to the Group and financial resources presently available to the Group, the Group will have sufficient working capital to satisfy its requirements for at least twelve (12) months from the date of this circular.

The Company has obtained the relevant confirmation as required under Rule 14.66(12) of the Listing Rules.

5. FINANCIAL AND TRADING PROSPECTS

The Group has business across the entire nickel industry value chain and is engaged in both the trading and the production of nickel products. In the first half of 2024, the Company promoted the development of various projects in an orderly manner, released its production capacity as scheduled, and achieved solid growth in productivity and sales volume of various businesses.

Looking ahead, the markets in which the Company's major products are located have better development expectations and can foster a suitable macro-environment for the Company's business development. With a number of proposals such as "Certain Measures on Strengthening Support for Large-scale Equipment Renewal and Trade-In of Consumer Goods" (關於加力支持大規模設備更新和消費品以舊換新的若干措施), the trade-in policies continue to be stepped-up, which will further boost downstream demand. The Company is expected to benefit from the demand growth arising from the recovery of consumption accordingly. In view of the increasingly fierce competition landscape of the industry and fluctuating market prices, the Company is confident that it will strengthen its competitiveness in terms of technology and

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

cost control, and continue to provide quality nickel products and services based on its profound understanding of the industry. Adhering to the philosophy of “From Diligence, Toward Excellence” (力致卓越, 勤無止境) continuously, the Company will persist with its “seek progress amidst stability with transformation and upgrade” development direction, and strive to achieve the vision of “becoming the world-leading nickel industry chain service provider”.

6. MATERIAL ADVERSE CHANGE

The Directors confirm that, as of the Latest Practicable Date, there has been no material adverse change in the financial or trading position of the Group since 31 December 2023, being the date to which the latest published audited accounts of the Group were made up.

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APPENDIX II

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars with regard to the Company given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. 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.

2. DISCLOSURE OF INTERESTS

(a) Disclosure of the interests of the Directors, Supervisors and chief executives of the Company

As of the Latest Practicable Date, the interests and short positions of the Directors, Supervisors and chief executives of the Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, entered into the register maintained by the Company referred to therein; or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code were as follows:

Interest in the Shares of the Company

Name of Director, Supervisor or Chief Executive	Class of shares	Capacity and nature of interest	Number of Shares^{(1)}	Approximate percentage of shareholding in the relevant class of shares^{(2)}	Approximate percentage of shareholding in the Company^{(3)}
Mr. Cai Jianyong^{(4)}	Unlisted Shares	Beneficial owner and interest held by controlled corporations	799,987,865(L)	76.02%	51.41%
Mr. Cai Jianwei	Unlisted Shares	Beneficial owner	10,406,000(L)	0.99%	0.67%
Ms. Fei Feng^{(5)}	Unlisted Shares	Beneficial owner and interest held by controlled corporations	31,819,500(L)	3.02%	2.05%

APPENDIX II

GENERAL INFORMATION

Name of Director, Supervisor or Chief Executive	Class of shares	Capacity and nature of interest	Number of Shares^{(1)}	Approximate percentage of shareholding in the relevant class of shares^{(2)}	Approximate percentage of shareholding in the Company^{(3)}
	H Shares	Interest held by controlled corporations	1,873,000(L)	0.37%	0.12%
Mr. Ge Kaicai	Unlisted Shares	Beneficial owner	7,804,500(L)	0.74%	0.50%
Mr Dong Dong	Unlisted Shares	Beneficial owner	10,406,000(L)	0.99%	0.67%

Notes:
(1) The letter “L” denotes the person’s long position in the Shares.
(2) The calculation is based on 1,052,315,000 Unlisted Shares and 503,616,350 H Shares as of the Latest Practicable Date.
(3) The calculation is based on a total number of 1,555,931,350 Shares as of the Latest Practicable Date.
(4) As of the Latest Practicable Date, (i) Mr. Cai, one of the executive Directors and the chairman of the Board, directly held 291,987,865 Unlisted Shares; (ii) Lygend Investment, 88% of the equity interest of which was held by Mr. Cai, directly held 507,000,000 Unlisted Shares; and (iii) Ningbo Lizhan, a wholly-owned subsidiary of Lygend Investment, directly held 1,000,000 Unlisted Shares. Therefore, by virtue of the SFO, Lygend Investment is deemed to be interested in the Shares held by Ningbo Lizhan, and Mr. Cai is deemed to be interested in the aggregate number of Shares held by Lygend Investment and Ningbo Lizhan.
(5) As of the Latest Practicable Date, Ms. Fei Feng directly held 7,804,500 Unlisted Shares, and was the general partner of each of the Company’s Employee Incentive Platforms. Therefore, by virtue of the SFO, Ms. Fei Feng is deemed to be interested in the aggregate number of 24,015,000 Unlisted Shares and 1,873,000 H Shares held by the Employee Incentive Platforms.

Interest in the Company’s associated corporations

Name of Director or Chief Executive	Name of associated corporation	Number of Shares	Nature of interest	Approximate percentage
Mr. Cai Jianyong	Lygend Investment^{(1)}
Ningbo Lizhan^{(2)}	N/A	Beneficial owner	88%
		N/A	Interest held by controlled corporations	100%

Notes:
(1) Lygend Investment, one of the Company’s controlling shareholders, is a limited liability company established in the PRC and did not issue any shares. As of the Latest Practicable Date, Mr. Cai Jianyong directly held 88% equity interest in Lygend Investment.

APPENDIX II

GENERAL INFORMATION

(2) Ningbo Lizhan, one of the Company's controlling shareholders and a wholly-owned subsidiary of Lygend Investment, is a limited liability company established in the PRC and did not issue any shares. As of the Latest Practicable Date, Mr. Cai Jianyong is deemed to be interested in the 100% equity interest in Ningbo Lizhan held by Lygend Investment.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, Supervisors and chief executives of the Company or their associates had any interests or short positions in any Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors and chief executives were deemed or taken to have under the provisions of the SFO), or which were required to be and are recorded in the register required to be kept by the Company pursuant to section 352 of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Disclosure of the interests of substantial shareholders and other persons of the Company

As at the Latest Practicable Date, so far as is known to the Directors, the following persons (not being Directors, Supervisors or chief executives of the Company) had, or were deemed to have, interests or shorts positions in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were required to be recorded in the register of interests required to be kept by the Company under section 336 of the SFO:

Name of Shareholder	Class of shares	Capacity and nature of interest	Number of Shares held or interested(1)	Approximate percentage of shareholding in the relevant class of Shares(2)	Approximate percentage of shareholding in the total share capital(3)
Ms. Xie Wen (谢雯)	Unlisted Shares	Beneficial owner	155,593,135(L)	14.79%	10.00%
Lygend Investment(4)	Unlisted Shares	Beneficial owner and interest held by controlled corporations	508,000,000(L)	48.27%	32.65%
Feng Yi(5)	H Shares	Beneficial owner	263,553,750(L)	52.33%	16.94%
Ms. Lim Shu Hua, Cheryl(5)	H Shares	Interest held by controlled corporations	263,553,750(L)	52.33%	16.94%
Oakswood Group Ltd(5)	H Shares	Interest held by controlled corporations	263,553,750(L)	52.33%	16.94%

APPENDIX II

GENERAL INFORMATION

Name of Shareholder	Class of shares	Capacity and nature of interest	Number of Shares held or interested^{(1)}	Approximate percentage of shareholding in the relevant class of Shares^{(2)}	Approximate percentage of shareholding in the total share capital^{(3)}
Ningbo Yinzhou
District Financial Holding Co., Ltd.
(寧波市鄞州區金融控股有限公司)	H Shares	Beneficiary of a trust
(other than a discretionary trust)	27,052,600(L)	5.37%	1.74%
HWABAO TRUST CO., LTD	H Shares	Trustee	27,052,600(L)	5.37%	1.74%
ICBC Credit Suisse Asset Management Co., Ltd.
(工銀瑞信基金管理有限公司)
(代工銀瑞信泰宏61號QDII單一資產管理計劃)	H Shares	Investment manager	34,810,000(L)	6.91%	2.24%
China Chengtong Holdings Group Co., Ltd.
(中國誠通控股集團有限公司)	H Shares	Interest held by controlled corporations	34,810,000(L)	6.91%	2.24%
The China State-Owned Enterprise Mixed Ownership Reform Fund Co., Ltd.
(中國國有企業混合所有制改革基金有限公司)	H Shares	Beneficial owner	34,810,000(L)	6.91%	2.24%
China International Capital Corporation (International) Limited^{(8)}	H Shares	Interest held by controlled corporations	42,900,600(L)
42,248,400(S)	8.52%
8.39%	2.76%
2.72%
China International Capital Corporation Hong Kong Securities Limited^{(8)}	H Shares	Underwriter	35,534,200(L)
34,882,000(S)	7.06%
6.93%	2.28%
2.24%

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APPENDIX II

GENERAL INFORMATION

Name of Shareholder	Class of shares	Capacity and nature of interest	Number of Shares held or interested(1)	Approximate percentage of shareholding in the relevant class of Shares(2)	Approximate percentage of shareholding in the total share capital(3)
Guangdong Brunp Recycling Technology Co., Ltd. (廣東邦善迴圈科技有限公司)(9)	H Shares	Interest held by controlled corporations	49,610,600(L)	9.85%	3.19%
Hongkong Brunp and Catl Co., Limited (香港邦普時代新能源有限公司)(9)	H Shares	Beneficial owner	49,610,600(L)	9.85%	3.19%
Ningbo Brunp Contemporary New Energy Co., Ltd (寧波邦普時代新能源有限公司)(9)	H Shares	Interest held by controlled corporations	49,610,600(L)	9.85%	3.19%

Notes:

(1) The letter “L” denotes the person’s long position in the Shares, and the letter “S” denotes the person’s short position in the Shares.

(2) The calculation is based on 1,052,315,000 Unlisted Shares and 503,616,350 H Shares as of the Latest Practicable Date.

(3) The calculation is based on a total number of 1,555,931,350 Shares as of the Latest Practicable Date.

(4) As of the Latest Practicable Date, (i) Mr. Cai, one of our executive Directors and the chairman of the Board, directly held 291,987,865 Unlisted Shares; (ii) Lygend Investment, 88% of the equity interest of which was held by Mr. Cai, directly held 507,000,000 Unlisted Shares; and (iii) Ningbo Lizhan, a wholly-owned subsidiary of Lygend Investment, directly held 1,000,000 Unlisted Shares. Therefore, by virtue of the SFO, (i) Lygend Investment is deemed to be interested in the Shares held by Ningbo Lizhan; and (ii) Mr. Cai is deemed to be interested in the aggregate number of Shares held by Lygend Investment and Ningbo Lizhan.

(5) As of the Latest Practicable Date, Feng Yi was wholly-owned by Oakswood Group Ltd, which was in turn solely held by Ms. Lim. Therefore, by virtue of the SFO, each of Oakswood Group Ltd and Ms. Lim are deemed to be interested in the Shares held by Feng Yi.

(6) As of the Latest Practicable Date, Ningbo Yinzhou District Financial Holding Co., Ltd. (寧波市鄞州區金融控股有限公司) (“Yinzhou Financial Holding”) is a state-owned enterprise directly under the People’s Government of Ningbo City (寧波市人民政府), and is ultimately controlled by the Ningbo City Yinzhou District State-owned Assets Supervision and Administration Commission (寧波市鄞州區國有資產管理委員會). For the purpose of the cornerstone investment, Yinzhou Financial Holding has engaged Hwabao Trust Co., Ltd. (華寶信託有限責任公司), a trust company that is a Qualified Domestic Institutional Investor approved by the relevant PRC authority, to subscribe for and hold the H Shares on a discretionary basis on its behalf.

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APPENDIX II

GENERAL INFORMATION

(7) China Chengtong Holdings Group Co., Ltd. (中國誠通控股集團有限公司) initiated the China State-Owned Enterprise Mixed Ownership Reform Fund Co., Ltd. (中國國有企業混合所有制改革基金有限公司) (“Mixed-ownership Reform Fund”), which is a national fund approved by the State Council and entrusted by the State-owned Assets Supervision and Administration Commission of the State Council. Mixed-Ownership Reform Fund has engaged ICBC Credit Suisse Asset Management Co., Ltd. (工銀瑞信基金管理有限公司), an asset manager that is a Qualified Domestic Institutional Investor approved by the relevant PRC authority, to subscribe for and hold the H Shares on its behalf.

(8) As of the Latest Practicable Date, based on the disclosure of interests form submitted by China International Capital Corporation (International) Limited on 6 December 2022 (the date of the relevant event set out in the form was 1 December 2022), these shares comprised (i) 35,534,200 shares (long position) and 34,882,000 (short position) held through China International Capital Corporation Hong Kong Securities Limited; (ii) 4,216,400 shares (long position) and 4,216,400 shares (short position) held through CICC Financial Trading Limited; and (iii) 3,150,000 shares (long position) and 3,150,000 shares (short position) held through CICC Wealth Investment Limited.

(9) As of the Latest Practicable Date, Hongkong Brunp and Catl Co., Limited (香港邦普時代新能源有限公司) (“Hong Kong CATL”) held the H Shares and was a direct shareholder of the Company. Hong Kong CATL is an indirectly controlled subsidiary of Contemporary Amperex Technology Co., Limited (寧德時代新能源科技股份有限公司) (“CATL”), a company established in 2011 and listed on the Shenzhen Stock Exchange since 2018 (stock code: 300750). The Company jointly established Contemporary Brunp Lygend Co., Ltd. with a subsidiary of CATL, Ningbo Brunp Contemporary New Energy Co., Ltd. (寧波邦普時代新能源有限公司), and Ningbo Ruiting Investment (the largest shareholder of CATL as of December 31, 2021).

Save as disclosed above, as at the Latest Practicable Date, the Company had not been notified of any entities/persons (other than the Directors or chief executive of the Company) who had a long or short position in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

3. DIRECTORS' EMPLOYMENT IN SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, none of the Directors or proposed Directors of the Company was a director or employee of a company which had, or was deemed to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

4. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened by or against any member of the Group.

APPENDIX II

GENERAL INFORMATION

5. DIRECTORS' SERVICE CONTRACTS

Pursuant to Rules 19A.54 and 19A.55 of the Listing Rules, each of our Directors and Supervisors have entered into a contract in respect of, among other things, compliance with relevant laws and regulations, observance of the Articles of Association and provisions on arbitration.

Save as disclosed above, none of the Directors or Supervisors has or is proposed to have a service contract with any member of our Group (other than contracts expiring or determinable by the relevant employer within one year without the payment of compensation other than statutory compensation).

6. DIRECTORS' AND SUPERVISORS' INTERESTS IN ASSETS, CONTRACTS OR ARRANGEMENT AND COMPETING BUSINESS

As of the Latest Practicable Date:

(1) none of the Directors and Supervisors had any interests in any contract or arrangement entered into by any member of the Group which is significant in relation to the business of the Group, apart from their service contracts;

(2) none of the Directors and Supervisors had any interest, direct or indirect, in any assets which had been, since 31 December 2023, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group;

(3) none of the Directors and Supervisors and their respective close associates (as defined in the Listing Rules) had interest in the business (other than the business of the Group) which competes or is likely to compete, either directly or indirectly, with the business of the Group.

7. QUALIFICATIONS AND CONSENT OF EXPERT

The following is the qualification of the Independent Financial Adviser who has given its opinions contained in this circular:

Name	Qualifications
Grand Moore	A corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

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APPENDIX II

GENERAL INFORMATION

Grand Moore has been appointed as the Independent Financial Adviser to give its written consent to the issue of this circular, with the inclusion herein of its letter of advice and references to its name and/or its advice in the form and context in which they appear, and has not withdrawn its consent to date.

As at the Latest Practicable Date, Grand Moore had no shareholding in any member of the Group and nor held the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Grand Moore had no interest, direct or indirect, in any assets which had been, since 31 December 2023, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group, or which were proposed to be acquired or disposed of by or leased to any member of the Group.

8. MISCELLANEOUS

The registered office of the Company is 2/F, Mingchuang Building No. 707 Tiantong South Road Yinzhou District Ningbo City, Zhejiang Province PRC. The head office of the Company is 10-11/F, Building C10, R&D Park Lane 299, Guanghua Road Yinzhou District Ningbo City, Zhejiang Province PRC.

The principal place of business of the Company in Hong Kong is 46/F, Hopewell Centre, 183 Queen's Road East Wanchai, Hong Kong.

The joint company secretaries of the Company are Mr. Cao Zheng, who obtained the PRC Department Law Practitioner Qualification (中華人民共和國法律職業資格證書) and Ms. Chan Yuen Mui, who is a member of both The Hong Kong Chartered Governance Institute and The Chartered Governance Institute in the United Kingdom.

The H share registrar of the Company is Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

The English text of this circular shall prevail over the Chinese text in case of any inconsistency, except for the English names/translations of the companies established in the PRC, relevant authorities in the PRC and other Chinese terms used in this circular which are only translations of their official Chinese names.

81 -

APPENDIX II

GENERAL INFORMATION

9. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) had been entered into by members of the Group in the two years preceding the date of this circular and are or may be material:

(a) the MJM Shareholders Agreement;

(b) the New MJM Shareholders Agreement;

(d) the DCM Shareholders Agreement;

(e) the ONC Amendment Agreement;

(f) the BBS Shareholders Agreement;

(g) the Deed of Guarantee; and

(h) the TBP Share Pledge.

Save as disclosed above, no material contract (not being a contracted entered into in the ordinary course of business) has been entered into by any member of the Group within the two years immediately preceding the issue of this circular.

10. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the Company (www.lygend.com) for 14 days from the date of this circular:

(i) the letter from the Independent Board Committee, the text of which is set out on pages 40 to 41 of this circular;

(ii) the letter from the Independent Financial Adviser, the text of which is set out on pages 42 to 69 of this circular;

(iii) the written consent of the Independent Financial Adviser referred to under the paragraph headed "Qualifications and Consent of Expert" in this appendix;

(iv) the material contracts referred to in the section headed "Material Contracts" of this appendix;

(v) the proposed NBSS Share Pledge; and

(vi) this circular.

NOTICE OF EXTRAORDINARY GENERAL MEETING

九勤资源

LYGEND RESOURCES

Lygend Resources & Technology Co., Ltd.

宁波力勤资源科技股份有限公司

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

(Stock Code: 2245)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “EGM”) of Lygend Resources & Technology Co., Ltd. (the “Company”) will be held at 10:00 am on Monday, 13 January 2025 (or any adjournment thereof) at 10/F, Building C10, R&D Park, Lane 299, Guanghua Road, Yinzhou District, Ningbo City, Zhejiang Province, PRC, to consider and, if thought fit, pass the following resolutions. Unless otherwise defined, capitalised terms used in this notice shall have the same meanings as those defined in the circular of the Company dated 26 December 2024.

ORDINARY RESOLUTIONS

To consider and approve the DCM Shareholders Agreement and the transactions contemplated thereunder; and authorise any one director of the Company to sign or execute such other documents on behalf of the Company and to do all such things and take all such actions as he/she may consider necessary or desirable for the purpose of giving effect to the DCM Shareholders Agreement and completing the transactions contemplated thereunder with such changes as he/she may consider necessary, desirable or expedient.
To consider and approve the ONC Amendment Agreement and the transactions contemplated thereunder; and authorise any one director of the Company to sign or execute such other documents on behalf of the Company and to do all such things and take all such actions as he/she may consider necessary or desirable for the purpose of giving effect to the ONC Amendment Agreement and completing the transactions contemplated thereunder with such changes as he/she may consider necessary, desirable or expedient.
To consider and approve the BBS Shareholders Agreement and the transactions contemplated thereunder; and authorise any one director of the Company to sign or execute such other documents on behalf of the Company and to do all such things and take all such actions as he/she may consider necessary or desirable for the purpose of giving effect to the BBS Shareholders Agreement and completing the transactions contemplated thereunder with such changes as he/she may consider necessary, desirable or expedient.
83 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

To consider and approve the Deed of Guarantee and the transactions contemplated thereunder; and authorise any one director of the Company to sign or execute such other documents on behalf of the Company and to do all such things and take all such actions as he/she may consider necessary or desirable for the purpose of giving effect to the Deed of Guarantee and completing the transactions contemplated thereunder with such changes as he/she may consider necessary, desirable or expedient.
To consider and approve the NBSS Share Pledge and the transactions contemplated thereunder; and authorise any one director of the Company to sign or execute such other documents on behalf of the Company and to do all such things and take all such actions as he/she may consider necessary or desirable for the purpose of giving effect to the NBSS Share Pledge and completing the transactions contemplated thereunder with such changes as he/she may consider necessary, desirable or expedient.
To consider and approve the TBP Share Pledge and the transactions contemplated thereunder; and authorise any one director of the Company to sign or execute such other documents on behalf of the Company and to do all such things and take all such actions as he/she may consider necessary or desirable for the purpose of giving effect to the TBP Share Pledge and completing the transactions contemplated thereunder with such changes as he/she may consider necessary, desirable or expedient.

By order of the Board

Lygend Resources & Technology Co., Ltd.

CAI Jianyong

Chairman, General Manager and

Executive Director

The PRC, 26 December 2024

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

The voting at the EGM will be conducted by way of poll.
For the purpose of determining the eligibility to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 8 January 2025 to Monday, 13 January 2025, both days inclusive. During such period, no transfer of the Company’s H Shares will be registered. H Share Shareholders whose names appear on register of members of H Shares of the Company on Monday, 13 January 2025 will be entitled to attend the EGM. In order to be eligible to attend and vote at the EGM, H Share Shareholders whose transfers of Shares have not been registered shall deposit the transfer documents together with the relevant share certificates with the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Tuesday, 7 January 2025.
Each Shareholder entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote on his or her behalf. A proxy needs not be a Shareholder.
An ordinary resolution at a general meeting shall be passed by one half or above of the voting rights held by shareholders (including their proxies) attending the general meeting. A special resolution at a general meeting shall be passed by two-thirds or above of the voting rights held by shareholders (including their proxies) attending the general meeting.
The form of proxy must be signed by the Shareholder or his/her attorney duly authorized in writing. If the Shareholder is a corporation, the instrument must be either under its common seal or signed by the director or his/her attorney duly authorized. If the instrument is signed by an attorney of the Shareholder, the power of attorney authorizing that attorney to sign or other authorization document must be notarized.
In order to be valid, the form of proxy of the H Share Shareholders together with the power of attorney or other authorization document (if any) signed by the authorized person or notarially certified power of attorney must be deposited at the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong; or for the Unlisted Share Shareholders of the Company, to the business address of the Company in the PRC, at 10-11/F, Building C10, R&D Park, Lane 299, Guanghua Road, Yinzhou District, Ningbo City, Zhejiang Province, PRC, not less than 24 hours before the time appointed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of a form of proxy will not preclude a Shareholder from attending and voting in person at the EGM if he/she so wishes.
The EGM is expected to last for no more than half a day. Shareholders or their proxies attending the meeting are responsible for their own transportation and accommodation expenses. Shareholders or their proxies attending the meeting shall produce their identity documents.
All times refer to Hong Kong local time, except as otherwise stated.
85 -

AI assistant

Lygend Resources & Technology Co., Ltd. — Proxy Solicitation & Information Statement 2024

50471_rns_2024-12-26_83335eba-1507-4dca-9647-c4498382b479.pdf

力勤资源

LYGEND RESOURCES

Lygend Resources & Technology Co., Ltd.

宁波力勤资源科技股份有限公司

九勤资源

LYGEND RESOURCES

Lygend Resources & Technology Co., Ltd.

宁波力勤资源科技股份有限公司

I. INTRODUCTION

II. MATTERS TO BE RESOLVED AT THE EGM

A. Connected JV Agreements

1. DCM Shareholders Agreement

Principal Terms of the DCM Shareholders Agreement

Capital Increase and Shareholding Structure

Future Funding

DCM Board of Directors

DCM Board of Commissioners

DCM Commissioners' Reserved Matters

DCM Shareholders’ Reserved Matters

Transfer of New DCM Shares

Reasons for and Benefits of the DCM Shareholders Agreement

Implications under the Listing Rules

2. ONC Amendment Agreement

Principal Terms of the ONC Amendment Agreement

Date

Parties

Capital Increase and Shareholding Structure

Reasons for and Benefits of the ONC Amendment Agreement

Implications under the Listing Rules

3. BBS Shareholders Agreement

Principal Terms of the BBS Shareholders Agreement

Future Funding

BBS Board of Directors

BBS Board of Commissioners

BBS Commissioners' Reserved Matters

BBS Shareholders' Reserved Matters

Transfer of BBS Shares

Reasons for and Benefits of the BBS Shareholders Agreement

Implications under the Listing Rules

4. Aggregation and Implications of the JV Agreements under the Listing Rules

5. Directors' Confirmation

6. Information on the Group

7. Information on DCM

8. Information on ONC

9. Information on the Parties Involved

10. Exchange Rates

B. Financial Assistance

1. Provision of Financial Assistance by the Group to KPS

Date

Parties

Facility

Term of Facility

Interest

Deed of Guarantee

Date

Parties

Guarantee and undertaking:

Indemnity:

Effective period:

NBSS Share Pledge

Date

Parties

Pledge:

Effective period:

2. Receipt of Financial Assistance by the Group from TBP

TBP Share Pledge

Date

Parties

4. Reasons for and Benefits of the Financial Assistance

5. Implications under the Listing Rules

8. Information on the Parties Involved

III. EGM AND PROXY ARRANGEMENTS

IV. CLOSURE OF REGISTER OF MEMBERS

V. RECOMMENDATIONS

力勤资源

LYGEND RESOURCES

Lygend Resources & Technology Co., Ltd.

Lygend Resources & Technology Co., Ltd. Proxy Solicitation & Information Statement 2024