Zhong Ke San Huan and Southern Rare Earth Signed LOI on Cooperation

On April 21, 2019, Zhong Ke San Huan and China Southern Rare Earth Group Co., Ltd (Southern Rare Earth) held signing ceremony of cooperation in Ganzhou city. Chairman Xie Zhihong of Southern Rare Earth and Chairman Wang Zhenxi of Zhong Ke San Huan signed the Letter of Intent on Cooperation on behalf of the two companies. The Deputy Mayor of Ganzhou city Mr. Hujuwen, the Deputy Chairman of Ganzhou CPPCC Mr.Lan Yun, Southern Rare Earth’s General Manager Mr. Li Zhuxing, Zhong Ke San Huan’s Vice Chairman Mr. Hu Boping, President Ms. Ma Jian and Senior Vice President Mr. Zhao Yinpeng attended the ceremony.


According to the Letter of Intent on Cooperation, Zhong Ke San Huan plans to have 5% of shares of Southern Rare Earth by means of increasing capital and share expansion, and the two companies intend to jointly establish an enterprise producing high performance sintered Nd-Fe-B magnets with capacity of 5000 tons per year in Ganzhou, Jiangxi Province.


The key points of this LOI:

1Southern Rare Earth agrees that Zhong Ke San Huan holds 5% of shares of Southern Rare Earth by means of increasing capital and share expansion.


2The two companies intend to jointly invest in high-end rare earth magnet material project by establishing a high performance sintered Nd-Fe-B joint venture enterprise with capacity of 5000 tons/year. Southern Rare Earth shall hold no more than 34% of shares of this joint venture. Zhong Ke San Huan shall decide its progress according to market demand. The project will be carried out in phases and the first phase will be no less than 2,000 tons/year. Southern Rare Earth shall assist Zhong Ke San Huan in selecting site and reaching land purchase intention.


3In five years after Zhong Ke San Huan invests in Southern Rare Earth, Southern Rare Earth shall not accept any other rare earth permanent magnet enterprise to become its shareholder.


4Both parties will enhance the business cooperation and Southern Rare Earth will supply rare earth materials to Zhong Ke San Huan with a best market price.


Southern Rare Earth is one of the six major rare earth groups approved by the State Council. It is a core member of China's Xijin Valley and China's largest heavy rare earth production and operation enterprise. It has abundant strength in the field of rare earth production and trade. Through this cooperation, the two companies will give full play in respective advantages in rare earth mining, rare earth metal smelting separation and permanent magnet material production, and realize the close integration of the upstream and downstream of the industrial chain. Through this cooperation, Zhong Ke San Huan will be further guaranteed with rare earth raw materials (especially heavy rare earths) supply, which is significant in enhancing its competitiveness in new energy vehicles and other fields.