The planned amount of convertible bonds to be raised will be reduced by more than half to no more than 710 million yuan compared to the previous version; The previously planned 534 million yuan for the annual production of 10,000 tons of copper foil project is currently in a suspended phase.
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Henan Yuguang Gold & Lead's convertible bond project, which has been under preparation for two years, has finally made significant progress after nearly halving its size. In a post-market announcement today, the company announced that its ¥710 million convertible bond project has been granted approval by the China Securities Regulatory Commission.
According to the announcement, Henan Yuguang Gold & Lead plans to raise no more than ¥710 million in this round, which is less than half of the previous ¥1.47 billion. Correspondingly, the previously planned ¥534 million annual production of 10,000 tons of copper foil project has been cancelled, and the planned supplementary working capital project has been reduced from ¥438 million to ¥212 million.
Regarding the reason for the cancellation of the copper foil project, a person in charge of Henan Yuguang Gold & Lead told reporters that the company's copper foil business had already built a pilot line with its own funds. Based on the operation of the pilot line and the development of the market, it was felt that the project was not suitable as a fundraising project. Currently, it is in a stage of deferred promotion. If the market situation improves in the future, the project may be further promoted through its own funds or refinancing, since the company has accumulated certain advantages in the upstream raw materials of cathode copper and sulfuric acid and in the downstream customers.
In fact, the copper foil market is already in a state of intense competition. On ****, Jiangxi Copper (600362.SH) announced the termination of the split holding subsidiary Jiangxi Province Jiang Copper Copper Foil Technology Co., Ltd. from listing on the Growth Enterprise Market (GEM) based on current market conditions. In its 2023 financial report, Jiangxi Copper mentioned that the expansion rate of electrolytic copper foil is far greater than the demand growth rate, and industry competition is intensifying. Processing fees have plummeted, and the overall profit of the copper processing industry has declined, showing differentiation further.
According to a copper foil analyst who had spoken to a reporter, with the continuous release of planned production capacity, competition in the copper foil industry has become even more intense. Since the beginning of this year, the overall operating rate of the copper foil industry has remained at about 60%, and downstream stockpiling is quite strong, but actual consumption remains weak except for a slight increase in lithium battery copper foil. The demand for electronic circuit copper foil remains weak.
According to the announcement, Henan Yuguang Gold & Lead proposed to raise ¥1.47 billion in convertible bonds for the first time in May 2022. According to Mysteel data, the processing fee for mainstream 6-micron lithium battery copper foil at that time was around ¥45,000/ton, which has since fallen by about 60% to roughly ¥17,000-¥19,000/ton.
It is worth mentioning that the largest investment in Henan Yuguang Gold & Lead's convertible bonds, not exceeding ¥710 million this time, is the regenerated lead closed production line project, which is expected to receive an investment of ¥376 million.
Previously, when interviewed by a reporter from Cailian Press, a senior executive of Henan Yuguang Gold & Lead said that as primary lead was affected by factors such as a decrease in ore grades from upstream mines, supply at the raw material end had become increasingly tight. It is a general trend for the company to strengthen its position in the lead industry and "walk on both legs" by increasing its investment in regenerated lead.