Shenghe Resources to Sell Stakes in Rare Earth Smelting and Separation Units to China Rare Earth Group Subsidiary

Shenghe Resources Holding Co.,Ltd. (600392.SH) has announced a plan to enter into an equity cooperation with China Rare Earth Group Industrial Development Co., Ltd. ("CRG Development") by transferring partial stakes in its rare earth smelting and separation operations to CRG Development, in order to leverage each party's strengths and achieve mutually beneficial cooperation.

The company will first divest the non-rare-earth-smelting-and-separation businesses from its controlling subsidiary Leshan Shenghe Rare Earth Co., Ltd. ("Leshan Shenghe"), and then transfer 51% of the equity in the divested entity ("Leshan Shenghe (New)") to CRG Development.

Additionally, Shenghe Resources will transfer 51% stakes held by its controlling subsidiary Ganzhou Chenguang Rare Earth New Materials Co., Ltd. ("Chenguang Rare Earth") in rare earth smelting and separation companies 鈥?Quannan Xinziyuan Rare Earth Co., Ltd. ("Quannan Xinziyuan"), Jiangyin Jiahua New Material Resources Co., Ltd. ("Jiangyin Jiahua"), and Zibo Jiahua New Material Resources Co., Ltd. ("Zibo Jiahua") 鈥?to CRG Development.

Prior to this transaction, Shenghe Resources held businesses including rare earth mining, rare earth smelting and separation, rare earth metal processing, rare earth deep processing, rare earth waste recycling, and zirconium-titanium ore mining and processing. This equity cooperation is limited solely to the rare earth smelting and separation business and does not involve the company's other operations.

China Rare Earth Group possesses advantages in resources and industry. Through this equity transfer, Shenghe Resources is bringing in a wholly-owned subsidiary of China Rare Earth Group to hold stakes in four rare earth smelting and separation enterprises, achieving equity cooperation between the two parties in the smelting and separation business.

After the completion of the equity transfer, the company will work together with CRG Development to fully leverage resources and industrial advantages to ensure production quotas and raw material supplies for the target companies, and strive to expand their production scale, achieving mutually beneficial cooperation for both parties.