China Graphite (02237.HK) announced on June 17 that the company's indirect wholly-owned subsidiary, Heilongjiang Province Baoquanling Agriculture Reclamation Yixiang New Energy Material Co., Ltd., and Qingdao Xintaihe Nanometer Technology Co., Ltd. (Qingdao Xintaihe), Beijing Chuangshi Hongjing Investment Consulting Co., Ltd. (Beijing Chuangshi), Beijing Zhongjing Ruixi Biotechnology Co., Ltd. (Beijing Zhongjing), and AST (Hong Kong) Technologies Limited (AST) respectively entered into four non-legally binding framework agreements on June 17, 2024, related to potential investment in the production facilities and operation of the graphite mining site (obtained mining rights in 2019) located about 28 kilometers northwest of Luobei County, Heilongjiang Province, and potential business cooperation with Qingdao Xintaihe in supplying graphite products.

Subject to the premise of entering into a formal agreement with the contracting parties according to the framework agreement, Qingdao Xintaihe, Beijing Chuangshi, Beijing Zhongjing, and AST or their designated parties suggest that they will invest RMB 10 million individually in Yixiang New Energy to construct the production facilities and operation of Beishan mining site through individual negotiation of debt or equity or other means. In addition, in order to further enhance the business relationship between Yixiang New Energy and Qingdao Xintaihe, Yixiang New Energy suggests supplying graphite products to Qingdao Xintaihe, with a proposed quantity of no less than 10,000 tons per year and a sale price determined by both parties according to market conditions.

The directors believe that seeking external funding from time to time to ensure sufficient funds for the development of mining sites and production equipment to seize market opportunities is beneficial to the Group. In addition, proposed investments and business cooperation with existing downstream customers, Qingdao Xintaihe, can create synergies and ensure the Group's external sales and supply of graphite products.

The directors believe that the proposed investment and/or business cooperation between Yixiang New Energy and Qingdao Xintaihe, Beijing Chuangshi, Beijing Zhongjing, and AST can demonstrate the capital strength of the Group's development, ensure business cooperation with downstream customer Qingdao Xintaihe, and is in line with the overall interests of the Company and shareholders.