Smick investment agreement to further upstream raw materials

Smick (002162) following May 11 announced will be in Jiangxi province Yifeng County Investment and development of lithium clay resources, 26th and Jiangxi Province Guangfeng County Government signed the "Talc Comprehensive development and Utilization project cooperation letter of intent", the two sides plan to invest 100 million U.S. dollars to develop Guangfeng County black talc Mineral Resources. In the project companies planned by both sides, the Guangfeng or its authorized institutions are financed by Non-cash assets such as mining rights, accounting for about 20% per cent of the stake in the project company, Smick in cash (about $27 million), and about 80% per cent of the project company's equity ratio.　　The project is to invest about 100 million dollars, of which the registered capital of about 33 million U.S. dollars, the remaining funds through bank financing and other means to solve, in three phases of implementation.　　According to the agreement, the Guangfeng County government is responsible for the project of Black Talc to carry out detailed investigation, reserves assessment and mining rights valuation, as the first contribution of black talc Ore detailed survey report completed within two months, and committed to Smick in Guangfeng investment enjoy land, tax and other preferential policies.　　Guangfeng County in the territory of black talc reserves rich, after calcination of Black talc, is the production of a major ceramic tiles, one of the main raw materials, the current Smick annual procurement from the Guangfeng County of black talc about 100,000 tons, the purchase amount of about 76 million yuan, accounting for the company's annual raw material procurement of 15% of total. Smick said that the company and the Guangfeng County government cooperation in the development of Black Talc project, if approved by the investment, will enable the company's industrial chain to the construction of ceramic industry upstream extension, reasonable savings in procurement costs.　　At the same time, as the Black talc processing products with good insulation, heat, adsorption, lubrication and other characteristics, can be applied to paint, paper, plastics and other fields, the project will also be the project company in the black talc comprehensive utilization and deep-processing products to create a certain economic benefits.　　Smick also said that after the implementation of the project, the initial product will be mainly for their own use, gradually reach the postpartum, for their own consumption will account for a small part of the majority of the external sales. The investment intention, and the 11th this month announced the investment project has many similar places, also is signed with the Jiangxi Province local government, all is obtains the ceramic raw material, moreover the investment scale relative smick is not small.