On November 18, Glonghui announced that the graphex group (06128.HK) has entered into an intent agreement with the People's Government of Nanshu Town (collectively referred to as "contracting parties") to jointly build the second phase of the graphite deep processing project in the graphite industry gathering area of Nanshu Town ("Phase 2 Project"). The expected investment for the Phase 2 Project is 2 billion yuan, which primarily involves the production and processing of lithium battery anode materials. As a partner, the People's Government of Nanshu Town will provide several preferential policies and a good business environment to the group and assist the group in applying for various permits, planning, and environmental assessments for the Phase 2 Project. In return, the group is required to invest in the Phase 2 Project and pay taxes to the People's Government of Nanshu Town.

The contracting parties also intend to acquire an 80-acre (approximately 53,280 square meters) piece of land located in Nanshu Town through bidding and auction for the operation of the Phase 2 Project. It is expected that once all related plans and approvals are ready, the land can be bid on and auctioned within six months. If the company successfully acquires the land, it is anticipated that the Phase 2 Project will commence within 4 to 6 months after the land auction.

The building area of the Phase 2 Project is approximately 50,000 square meters. It is expected that upon completion of the Phase 2 Project, after passing energy and environmental assessments, it will produce 20,000 tons of natural graphite anode materials and 100 tons of graphene, with an annual output value of approximately 1 billion yuan. The contracting parties will establish a joint working group to complete the preliminary work before the land bidding and auction. In addition, the contracting parties plan to further establish a "Land Cooperation Agreement between the People's Government of Nanshu Town and Graphex Group Holdings Limited" to record each party's responsibilities in operating the land.

The company faced multiple challenges during the first phase of the project ("Phase 1 Project"). The company obtained the energy permit for the Phase 1 Project in August 2024 and is awaiting the approval of the environmental permit. However, the local power supply bureau has informed the company that the current electrical utilities supply is insufficient for the use of the Phase 1 Project's factory. The company has consulted with a local power engineering company regarding this issue and is negotiating possible remedial measures with the owners and the People's Government of Nanshu Town. In light of this situation, the implementation of the Phase 1 Project will be delayed. The company intends to resolve this situation by the end of 2024.