Graphex Group Provides Important Updates on its Global Mine-to-Battery Solution, Including the Separation of its US Subsidiary Graphex Technologies LLC into a Standalone U.S. company, and Financing for a 200% Production Increase over Current Levels

Rhea-AI Summary

Graphex Group Limited (NYSE American: GRFX | HKSE: 6128) is separating its U.S. graphite processing arm, Graphex Technologies LLC, as a stand-alone company with anticipated stock consideration of US$100 million to US$200 million paid by a SPAC from the business combination transaction to be distributed to all Graphex Group shareholders. The company's global market capitalization is approximately US$42.622 million, with a current maximum annual production capacity of 10,000 tonnes per annum (tpa) of anode material, all processed in China. The LOI with a NASDAQ-listed SPAC contemplates a pre-money enterprise valuation of Graphex Technologies between US$100 million to US$200 million. The company has also received an LOI from a major bank in China for project financing of RMB400 million (US$56.5 million) to complete the first expansion phase in Qingdao, Shandong, PRC, expected to complete in Q3 2024 and increase capacity by 200% to 30,000 tpa. The second expansion phase is expected to be completed by the end of 2025, increasing capacity by an additional 30,000 tpa to 60,000 tpa. Expansion plans are in place to reach over 100,000 tpa before 2030.

Insights

Financial Analyst

The strategic move by Graphex Group to spin off its U.S. graphite processing arm into an independent entity through a SPAC transaction is a significant development. This action aims to unlock value for shareholders by distributing stock consideration estimated between US$100 million to US$200 million. Such a separation can potentially enhance shareholder value and provide Graphex Technologies LLC with a focused approach to cater to the U.S. market.

From an investment perspective, this deal may signal confidence in Graphex Tech's growth prospects and its ability to operate successfully as a standalone company. However, investors should consider the risks associated with SPAC transactions, including market volatility and regulatory uncertainties. The anticipated increase in production capacity, with plans to reach over 100,000 tpa before 2030, aligns with the growing demand for lithium battery materials, suggesting a long-term strategic vision that could positively impact future earnings.

Supply Chain Expert

The expansion of Graphex Group's production capacity in China and the U.S. reflects a strategic initiative to create domestic end-to-end production ecosystems. This approach is particularly relevant given the current geopolitical tensions and the push for supply chain resilience. By increasing its production capacity from 10,000 tpa to potentially 60,000 tpa by the end of 2025, Graphex Group is positioning itself to meet increasing global demand.

The establishment of separate production ecosystems in the U.S. and China may also mitigate risks associated with trade barriers and tariffs, potentially leading to more stable and predictable operational costs. Investors should note the potential for increased efficiencies and cost savings, which could translate into stronger competitive positioning and higher margins in the long run.

Energy Sector Analyst

The focus on expanding graphite anode production is timely, as the material is critical for lithium-ion batteries in the burgeoning electric vehicle (EV) and renewable energy storage markets. Graphex Group's strategy to expand operations and separate its U.S. subsidiary to serve specific markets is indicative of the increasing importance of localizing supply chains in the energy sector.

With the projected completion of expansion phases in China and the establishment of an independent U.S. entity, Graphex is poised to capitalize on the projected growth in demand for battery materials. Investors should monitor the execution of these expansion plans and the company's ability to maintain technological competitiveness, as these factors will be crucial in determining Graphex's market share and profitability in a rapidly evolving industry.

Graphex Group will be separating its U.S. graphite processing arm - Graphex Technologies LLC - as a U.S. domiciled independent player in the market as a stand-alone company, with anticipated stock consideration of US$100 million to US$200 million paid by a SPAC from the business combination transaction to be distributed to all Graphex Group shareholders.

WARREN, Mich.--(BUSINESS WIRE)-- Graphex Group Limited (“Graphex Group” or the “Company”) (NYSE American: GRFX | HKSE: 6128), together with its wholly owned U.S. subsidiary, Graphex Technologies, LLC (Graphex Tech), see the recent steps being taken by the governments of the US and China as validation of Graphex’s long-standing strategy to expand operations globally and to create separate, domestic end-to-end production ecosystems – from mine to battery – to serve both markets.

With over a decade of commercial scale production experience and proven proprietary technology and methods, the expansion in both the U.S. and China is expected to be seamless.

As of December 18, 2023, the global market capitalization of Graphex Group was approximately US$42.622 million.

Our current maximum annual production capacity is 10,000 tonnes per annum (tpa) of anode material, all processed in China.

U.S. Operations Separation

• On December 6, 2023, Graphex Group announced the signing of an LOI with a NASDAQ-listed SPAC
• The LOI contemplates a pre-money enterprise valuation of Graphex Technologies, Graphex Group’s US operating arm, net of liabilities, between US$100 million to US$200 million
• Upon the completion of the intended transaction with the SPAC, the anticipated consideration of US$100 million to US$200 million in consideration shares for the separation of Graphex Tech will be distributed to all Graphex Group shareholders.
• Upon completion of the transaction, Graphex Tech will be its own, stand-alone entity independent of Graphex Group

More information on Graphex Tech and this U.S. initiative will follow in a separate corporate update

Production Expansion Update

• Current graphite anode production capacity - 10,000 tpa
• LOI from a major bank in China for project financing of RMB400 million (US$56.5 million) to complete first expansion phase in Qingdao, Shandong, PRC
• First expansion phase expected to complete in Q3 2024 and increase capacity by 200% to 30,000 tpa
• Second expansion phase expected to be completed by the end of 2025 and increase capacity by an additional 30,000 tpa to 60,000 tpa
• Expansion expected to unlock substantial growth driven by increasing demand for graphite materials used in lithium battery production
• Additional expansion plans in place to reach over 100,000 tpa before 2030

More information on Graphex Group and the China expansion initiative will follow in a separate corporate update

To learn more about Graphex Technologies, please visit www.graphexgroup.com.

About Graphex

Graphex is a multinational technology company focused on the development of technologies and products to enhance renewable energy, particularly the refining of natural spherical graphite, synthetic graphite, and graphene-related products - key components in EVs/Lithium-ion batteries as well as in other uses. Graphex has extensive commercial experience in the deep processing of graphite and producing battery grade graphite anode material. Current production is 10,000 tonnes per annum (tpa) with a current expansion underway to increase production to 30,000 tpa within the next 9 months, to 100,000 tpa over the next 36 months, and to 150,000 tpa or more by 2030. Graphex is currently among the top suppliers of specialized graphite anode material to the EV and renewable energy industries and holds patents in areas including products, production methods, machinery design, and environmental protection. Graphex’s strategy is to expand its operations globally to support energy transition and electrification efforts worldwide.

To learn more about Graphex Technologies, please visit www.graphexgroup.com.

Forward Looking Statements

All statements contained in this presentation other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the safe harbor in Section 27A and 21E of the Securities Act of 1933 and the Securities Exchange act of 1934, respectively. You can identify some of these forward looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. We have based these forward looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short term and long-term business operations and objectives, and financial needs. These forward looking statements involve various risks and uncertainties. Information from third sources identified in this release is based on published reports for such information and we have assumed the accuracy of such reports without independent investigation or inquiry. This communication is for informational purposes only and is neither an offer to sell nor a solicitation of an offer to purchase any securities of Graphex Group Limited, including but not limited to its American Depositary Shares.

Each of the transactions described in this press release is subject to conditions including the negotiation and execution of definitive agreements and, regarding the separation of Graphex Technologies, stockholder consent and regulatory approvals. There can be no assurance that either transaction will be completed on acceptable terms or at all.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231219345488/en/

Corporate:

Graphex Group

info@graphexgroup.com

www.graphexgroup.com

Source: Graphex Group Limited

FAQ

What is Graphex Group Limited (GRFX)?

Graphex Group Limited (NYSE American: GRFX | HKSE: 6128) is a company that specializes in graphite processing and production of anode material for lithium batteries.

What is the global market capitalization of Graphex Group?

The global market capitalization of Graphex Group is approximately US$42.622 million.

What is the current annual production capacity of Graphex Group?

The current maximum annual production capacity of Graphex Group is 10,000 tonnes per annum (tpa) of anode material, all processed in China.

What is the anticipated stock consideration for the separation of Graphex Technologies LLC?

The anticipated stock consideration for the separation of Graphex Technologies LLC is US$100 million to US$200 million, to be distributed to all Graphex Group shareholders.

What expansion plans does Graphex Group have in place?

Graphex Group has expansion plans to reach over 100,000 tpa before 2030, with the first expansion phase expected to complete in Q3 2024 and increase capacity by 200% to 30,000 tpa, and the second expansion phase expected to be completed by the end of 2025, increasing capacity by an additional 30,000 tpa to 60,000 tpa.