Announcement on the Investment in the Construction of the Lufupa Hydropower Station Project in the Democratic Republic of Congo
The Company and the Board of Directors guarantee that the information disclosed is true, accurate, and complete, and that there are no false records, misleading statements, or significant omissions.
I. Overview of External Investment
(I) To further ensure the stable electricity supply and reduce electricity costs for the Company's subsidiary in the Democratic Republic of Congo, and to enhance production continuity and cost controllability, Tengyuan New Materials (Hong Kong) Investment Holding Co., Ltd. (hereinafter referred to as "Hong Kong Tengyuan"), a wholly-owned subsidiary of the Company, plans to jointly invest in and develop the Lufupa Hydropower Station project in the Democratic Republic of Congo with Jinchengjian Co., Ltd. (hereinafter referred to as "Jinchengjian").
(II) Overview of the Transaction Plan
This investment will be implemented through the capital increase of a holding platform company established by the Company's wholly-owned subsidiary to cooperate with the counterparty. The counterparty, Jinchengjian, will first establish a holding platform company in Hong Kong (hereinafter referred to as "Hong Kong Joint Venture Company") and acquire 100% equity of the project company PARFAIT ENERGIE SARL (hereinafter referred to as "Perfect Energy") through this platform. Perfect Energy has obtained the concession rights for the Lufupa Hydropower Station project and is the ultimate implementing entity of the project.
After negotiation among the parties, the preliminary pre-investment valuation of Perfect Energy is determined to be US$19.5 million (the final valuation shall be subject to the report issued by the audit or appraisal institution appointed by the Company). Hong Kong Tengyuan, a wholly-owned subsidiary of the Company, will increase its capital by US$137.5 million to the Hong Kong Joint Venture Company. After the capital increase, the Company will hold an 87.58% equity stake in the Hong Kong Joint Venture Company, and the counterparty will hold a 12.42% equity stake.
Concurrently, the parties have agreed on a subsequent equity adjustment mechanism. In the mid-to-late stage of project construction and before formal commencement of operations, the counterparty may, under agreed conditions, purchase a portion of the Company's equity in the Hong Kong Joint Venture Company. However, the Company's shareholding ratio will always be no less than 55%, ensuring the Company's ultimate control over the project. The equity transfer price will be determined according to the pricing mechanism agreed upon by both parties. Subsequent equity transfers will be subject to the mutual agreement of both parties at that time and the fulfillment of relevant approval procedures, and do not constitute a commitment by the Company regarding equity transfers.
Upon completion of the overall transaction arrangement, it is expected that the Company will indirectly hold no less than 55% of the equity in Perfect Energy through the Hong Kong Joint Venture Company, thereby maintaining controlling interest in the Lufupa Hydropower Station project.
(III) Overview of the Lufupa Hydropower Station Project in the Democratic Republic of Congo
The Lufupa Hydropower Station is located on the Lufupa River in the Lufupa Province of the Democratic Republic of Congo, approximately 50 kilometers from Tengyuan Cobalt-Copper Resources (DRC) Co., Ltd. (hereinafter referred to as "DRC Tengyuan" or "TCC"), a wholly-owned subsidiary of the Company. The project has a total installed capacity of 100MW and will be developed in two phases: Phase I will involve the construction of a 35MW hydropower station and approximately 50km of dedicated 120kV transmission lines; Phase II will involve the construction of a 14MW cascade hydropower station and approximately 54.72MW of supporting photovoltaic power stations, forming a "hydro-solar complementary" system. According to the feasibility study report, the total investment of the project is approximately US$157 million (Phase I investment is approximately US$93.287 million, and Phase II engineering and supporting photovoltaic investment is approximately US$64.027 million). The project company that will ultimately own and operate the power station is Perfect Energy.