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Hainan Mining plans to acquire an African lithium mine for more than $100 million

On the evening of January 19, Hainan Mining(SSE: 601969), a subsidiary of Fosun, announced that to accelerate the industrial layout of the three main tracks of "iron ore + oil and gas + new energy" and realize the industrial synergy between upstream resources of the new energy industry and lithium salt processing, Fosun wholly-owned subsidiary, Xinmao Investment, intends to sign an additional issuance agreement and a capital increase agreement with Kodal Minerals PLC (hereinafter referred to as "KOD") and its wholly-owned subsidiary Kodal Mining UK (hereinafter referred to as "KMUK").

Moreover, Xinmao Investment planned to subscribe for 14.81% of KOD's additional shares by cash of US$17.75 million; and to increase the capital of US$94.34 million in cash to hold 51% of KMUK's equity.

At the same time, to achieve the same ratio of KOD's loan to KMUK, Xinmao Investment will provide KMUK with a shareholder loan of US$5.66 million (the above merger is referred to as "the transaction").

Hainan Mining & Fosun

August 2007

Fosun Group and Haigang Group jointly established Hainan Mining.

September 6th 2007

December 2014

In the company's shareholding structure, Hainan Haigang Group Co., Ltd. currently holds 29.4% of the shares, and Shanghai Fosun Industrial Investment Co., Ltd. holds 29.36%. Shanghai Fosun High-Tech (Group) Co., Ltd. holds 16.52% of the shares.

Eye on Lithium Battery

The original main business of Hainan Mining was the production and sales of iron ore. It engaged in the upstream business of oil and gas exploration, evaluation, development, and production through its holding subsidiary ROC. The company’s third quarterly report last year showed that the operating income of Hainan Mining in the first three quarters of 2022 was 3.793 billion yuan, a year-on-year decrease of 19.09%, and the net profit attributable to shareholders of listed companies was 598 million yuan, a year-on-year decrease of 38.87%. Among them, the net profit attributable to shareholders of listed companies in the third quarter was 161 million yuan, a year-on-year decrease of 59.77%.

Since last year, Hainan Mining has started to eye on the layout of the new lithium battery energy industry. On December 15, 2022, the subsidiary Hainan Xingzhihai New Materials' battery-grade lithium hydroxide project (Phase I) officially started in Danzhou, Hainan. The project plans to build a 20,000 ton/year monohydrate lithium hydroxide production line, a warehouse, and related public facilities; the total investment is 1.056 billion yuan, including 900 million yuan in fixed assets. The construction period is 15-18 months.

Gold Rush Paradise for China Mining Companies

It is worth noting that Hainan Mining is not only a Chinese company seeking lithium in Mali.

Zhejiang Kang Longda Special Protection Technology Co., Ltd., another Chinese public-listed company, is also involved in the Bougouni lithium mine project. Before Hainan Mining acquired KOD, the largest shareholder of KOD was the Singaporean company Suay Chin International Pte Ltd (hereinafter referred to as "Suay Chin"), which held 14.18% of KOD's shares. Suay Chin's largest shareholder is Kang Longda.

In addition, Chinese companies investing in lithium mines in Mali include domestic lithium mining giant Ganfeng Lithium. In June 2021, Ganfeng Lithium spent US$130 million to acquire a 50% stake in the Goulamina hard rock lithium mine project in Mali, thereby gaining at least half of the 455,000 tons of lithium concentrate production in the first phase of the mine.

In June last year, the Gulamina lithium mine project officially started construction and is scheduled to be put into production in 2023. The resource volume of the project is about 3.89 million lithium carbonate equivalents and can be mined for 21 years. According to a report on the SIKA website in Côte d'Ivoire, Mali will become the first lithium-producing country in West Africa at that time. Currently, Zimbabwe is the largest lithium-producing country in Africa.

According to Mali's relevant mining laws, the Mali government will obtain 10% of the equity of domestic mining companies in Mali for free and has the right to purchase further an additional 10% of the equity of mining companies.


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