Pangang Vanadium and Titanium (000629.SZ) announced that on May 31, 2019, the company and Sichuan Desheng Group Vanadium and Titanium Co., Ltd. (“Sichuan Desheng”) signed the “Integrated Sales Cooperation Agreement for Vanadium Products”. The two sides reached agreement on the matters related to Sichuan Desheng’s transferring its vanadium products to the company for integrated sales.

Sichuan Desheng has a vanadium slag production capacity of 140,000 tons per year , of which Leshan is 100,000 tons per year, and Yunnan Desheng Iron and Steel Co., Ltd. (“Yunnan Desheng”) is 40,000 tons per year. At present, Sichuan Desheng has no production capacity of vanadium pentoxide (flake), vanadium-nitrogen alloy, ferrovanadium and other products. The vanadium slag produced by Desheng is commissioned by other enterprises to process vanadium products for self-sale.

The company has a relatively perfect vanadium product line and professional sales platform, and has strong competitiveness and influence in the vanadium market.

The scope and mode of cooperation covers the vanadium resources of Sichuan Desheng, not only the raw materials and final products of vanadium tablets processed by Sichuan Desheng in the company, but also the sales plan covering the cooperative resources formulated by Pangang Group Chengdu Vanadium and Titanium Resources Development Co., Ltd. (“Chengdu Vanadium and Titanium”), a wholly-owned subsidiary of the company, in accordance with the company’s marketing management system and sales policy. Sales abroad.

The specific amount of resources that Sichuan Desheng enters into the company every month shall be agreed by both sides before 25 January. In principle, the monthly amount of resources within each quarter shall be balanced, and the amount of cooperation resources between the two sides shall be increased as soon as possible until all Sichuan Desheng resources enter the company for unified external sales.

Given that the two sides are still in the early stage of cooperation, it is still uncertain whether Desheng Sichuan can transfer all its vanadium resources to the company for unified sales within the one-year validity period stipulated in the Cooperation Agreement. Even when the resources of Sichuan Desheng vanadium slag are fully produced and all the vanadium products are processed into vanadium products for the company’s unified sales, the current market price level of vanadium products is estimated to increase the company’s business income to account for about 8.5% of the audited business income in the latest period, which has little impact on the company’s profit contribution and does not have a significant impact on the company’s operating performance this year. The cooperation between the two sides will not affect the company’s business independence, nor will the company rely on Sichuan Desheng for fulfilling the agreement.

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