investor presentation - investor... · delivered within the united states or to u.s. persons absent...

Investor Presentation

October 2019

Strictly Private & Confidential

Disclaimer

This presentation is strictly confidential. The information in this presentation has been prepared by representatives of Ganfeng Lithium Co., Ltd. (the “Company”) for use in presentations

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1. Company Overview

Ganfeng Lithium – China’s Largest Lithium Compounds Producer

1.78B RMB; USD 269m4

FY2018

Adj. EBITDA

13B HKD; 27B RMB Total Market

Capitalization5

220Research &

Development Staff3

7Investments in

Upstream Resources

4.89B RMB; USD740m4

FY2018

Total Revenue

No.3Lithium Compounds

Producer Globally1,2

No.1Lithium Metals

Producer Globally1,2

Note: 1. CRU Report. 2. As measured by production capacity in 2018. 3. As of July 7, 2018. 4.USD calculate using avg fx rate 2018 of 6.61 (Federal Reserve). 5. As of Sept 1, 2019.

2010IPO on Shenzhen

Stock Exchange

2018IPO on Hong

Kong Stock

Exchange

1

Key Milestones

20162014

2017

2000

• Established in Xinyu, Jiangxi Province by our founder Mr. Li Liangbin focusing on lithium metals

2010

• The first lithium company in China to go public on A-share market

• Acquired 51% equity interest in Blackstairs Lithium (Avalonia project)

• Launched a battery grade lithium hydroxide production line

• Established our research and development center for solid-state batteries

• Increased stake in RIM (Mt. Marion) to 43.1%

• Started to build our lithium-ion motive power battery plant in Jiangxi

2007• Launched the

production line for extraction of lithium chloride from salt lake brines

• Started to expand into downstream lithium battery production

• Acquired 25% interests in RIM (Mt. Marion) and secured raw material off-take for our operation

• Acquired additional equity interest in Blackstairs Lithium with shareholding reaching 55%

• Acquired 19.9% interest in Lithium Americas with off-take

• Acquired 4.84% interest in Pilbara Minerals with off-take

• Subscribed 15.8% of the total issued share capital in Explorex Resources Inc.

• Expanded into downstream retired battery recycling

• Capacity expansion plans– 20,000 ton/annum lithium hydroxide

production line– 17,500 ton/annum lithium carbonate

production line– High capacity lithium motive power

battery production line

• Acquired 9.9% interest in International Lithium and started to expand into the upstream section of the lithium industry value chain

2011 2015

2

2018

• Sign multi-year supply agreements with LG Chem, BMW, Tesla

• Complete Hong Kong IPO listing raising $US423mm

• Increased equity ownership in Pilbara Minerals to 9.5%

• Increased ownership of Mt. Marion to 50%

• Increased interest in Minera Exar to 50%) (Lithium Americas JV partner)

• Signed MOU w/ VW Group

• Agreement to acquire 29.9% of BCN and 22.5% of Sonora Lithium

2019

Overview of Lithium Value Chain

Consumer

Electronics

Energy

Storage

Glass &

Ceramics

ChemicalSpodumene

Spodumene

Concentrates/High

Concentration

Brine

Lithium

Carbonate

Lithium

Chloride

Lithium

Hydroxide

Lithium

Metal

Brines

End Uses

Electric

Vehicle

Aerospace

Alloy

Pharmaceuticals

Primary

Battery

• Lithium carbonate (Li2CO3) is a fine white powder and is

stable at room temperature

• Most commonly used lithium compounds to

make cathode material for lithium-ion batteries

• Can also be processed into other lithium compounds

such as lithium hydroxide and lithium bromide

• Lithium hydroxide (LiOH) is a fine white powder

processed from spodumene or other ores using a high

temperature chemical process, or converted from lithium

carbonate

• Fast becoming an important cathode material of Nickel-

Cobalt-Manganese (NMC) and Nickel-Cobalt-Aluminum

(NCA) battery, offering improved energy density

compared to other battery technologies

• Lithium metals is produced from electrolysis of lithium

chloride

• Often used in aluminum alloy for aerospace

components, anode for primary cells and

pharmaceutical catalysts

• Increasingly being applied as anode in solid state

batteries

Lithium Compounds Lithium Metal

Source: CRU Report.

3

Highly Integrated Business Model

Lithium Compounds Lithium Metals Lithium Batteries Others

Key Financials

Revenue: RMB3,181mm/USD481mmGross Profit: RMB1,148mm/USD214mmGross Margin: 36%

Revenue: RMB970m/USD146mmGross Profit: RMB494mm/USD75mmGross Margin: 51%

Revenue: RMB354mm/USD54mmGross Profit: RMB11m/USD1.6mmGross Margin: 3%

Revenue: RMB383mm/USD58mmGross Profit: RMB99.9mm/USD15mmGross Margin: 26%

Operational Footprint

• Specialty Lithium Plant (Jiangxi)• Xinyu Basic Lithium Plant (Jiangxi)• Ningdu Ganfeng (Jiangxi)

• Fengxin Ganfeng Lithium Plant (Jiangxi)

• Yichun Ganfeng Lithium Plant (Jiangxi)

• Dongguan Ganfeng Battery Plant (Guangdong)

• Ganfeng Lithium Power Battery Plant (Jiangxi)

• Ganfeng Recycling Technology (Jiangxi)

Segment Overview

• Mainly produce battery-grade lithium carbonate, lithium hydroxide, lithium chloride and lithium fluoride

• #3 player globally1

• #1 player in China1

• Produce lithium metals in the form of ingots, foil, rods and alloys

• #1 player globally1

• Produce lithium-ion motive power batteries, energy storage batteries and consumer electronics batteries

• Developing technologies for solid-state lithium batteries

• NMC precursor

• Lithium battery recycling: Launched in 2017 to meet growing demand for retired battery management due to rising electric vehicle sales

Revenue: RMB4,889mm (USD740mm) / EBITDA: RMB1,781mm (USD269mm)

Source: CRU report. RMB / USD = 6.61. (US Federal Reserve)Notes: 1. As measured by production capacity in 2018..

FY2018

Revenue

Breakdown

By Business Lines By Geography

Mainland China72%

Overseas28%Lithium

Compounds65%

Lithium Metals20%

Lithium Batteries

7%

Others8%

4

Our Worldwide Operations

Ireland

• Avalonia

Argentina

• Mariana

• Cauchari-Olaroz Australia

• Mount Marion

• Pilbara

• Altura

Ningbo R&D

Center

Dongguan Ganfeng

Ningdu Heyuan

Ningdu Ganfeng2

China

• Ningdu Heyuan

Notes: Data as of Sept 1, 2019. 1. Includes R&D facilities. 2. Under construction.

Resources

R&D Facilities

Production Facilities

Xinyu Basic Lithium Plant1

Fengxin Ganfeng

Yichun Ganfeng

Specialty Lithium Plant

Ganfeng Lithium

Power Battery Plant

Ganfeng Recycling

5

Mexico

• Sonora

Our Development Strategies

Lithium Compounds & Metals

Lithium Battery Production

Lithium Battery Recycling

• Expand Our Access to

Upstream Lithium

Resources Globally

• Increase the Production

Capacity of Our

Processing Operations

• Add to Our Current

Scalable, Diverse

Resource Portfolio to Meet

Growing Customer

Demand

• Grow Our Lithium Battery

Recycling Business

• Provide valuable solutions

Today, and be a Leader in

the Development of a

Sustainable Supply-Chain

in the Future

• Develop Battery

Production with a Focus

on Solid-state Lithium

Batteries

• Collaborate with the EV

Supply Chain to Improve

Safety and Performance of

Li-Batteries

Deepen Customer Relationships by Becoming a Provider of

Overall Solutions

6

2. Investment Highlights

Denotes products manufactured by our customers.

BrineSpodumene

Lithium Raw Materials

Lithium Metals

Retired Battery Recycling

Lithium Batteries

NMC PrecursorLithium

Chloride

Lithium

Hydroxide

Lithium

Fluoride

Lithium

Carbonate

Other Lithium

Compounds

Cathode

Materials

Anode

Materials1Electrolyte

Pharmaceutical

Catalyst Recycling

LiLi

Ni, Mn, Co

Source: CRU report.

Note: 1. We produce primary battery anode materials.

Vertically Integrated Business Model with Synergies across the Value Chain1

Butyllithium

Alloy

Ele

ctr

ic

Veh

icle

En

erg

y

Sto

rag

e

Co

nsu

mer

Ele

ctr

on

ics

Synergies Across the Value Chain

The major supplier for our battery production business is also a customer of our lithium compounds business

Our understanding of the lithium products value chain enables us to enhance the competitiveness of our battery products

Our ability to recycle lithium batteries addresses the waste management needs of battery manufacturers and electric vehicle producers, which helps solidify our relationships with such customers

Expansion of downstream business is conducive to our adaptation of new market trends

Aero

sp

ace

Syn

theti

cR

ub

ber

Ph

arm

a-

ceu

ticals

7

Source: CRU report.

Upstream

Resources

Lithium

Compounds

Cathode

Materials

Lithium

Hexafluoro-

phosphate Electrolyte

Lithium

Batteries

Entry Barrier

High High Low Medium Low Medium

Capital

Requirement

High Medium Low Low Low Medium

Production

Know-how

Medium High Low High Low Medium

Clear Industry

Standard

Yes Yes No Yes Yes Yes

Access to

Raw Material

Medium Hard Medium Medium Medium Easy

Upstream and Midstream Segments Offer the Highest Margin High Barriers to Entry Favoring Established Producers

2 World-leading Position in Lithium Compounds and Metals with High Barriers to Entry

Production Technologies and Know-how1

Product Development and Application Expertise2

Customer Relationships and Product Accreditation Process3

Secure Supply of Lithium Raw Materials at Competitive Cost4

Access to Experienced Management and Technical Personnel6

Operational Integration between Resource Extraction and Compound Production5

Major Capital Expenditures and Investments7

Indicative Development Timeline for Greenfield Spodumene Projects

First Drill JORC Report on Ore Resource Beneficiation Plant

Construction

Mining

JORC Report on Mineral ResourceResource Identification Mine Construction Ore Delivery

• Funding for exploration • Funding for feasibility study • Environmental reports

• Permits

• Equipment procurement

• Skilled labor

• Equipment installation

• Environmental reports

• Permits

• Equipment

procurement• Funding for mine construction

• Capital

• Managerial resources

Feasibility Study

and Design

Year 0 Year 1 Year 3 Year 4 Year 5 Year 6 Year 7 Years 8 & 9

8

Source: Company disclosure, CRU report.Note: 1. Measured pursuant to CIM Guidelines (NI43-101) 2. As of July 7, 2018, we held 16.93% equity interests in Lithium Americas, which owned 50% equity interests in Cauchari-Olaroz. 3. Measured pursuant to China national standards. 4. Measured pursuant to JORC standards. 5. Including indicated and inferred resource.

Ireland

• Avalonia (Spodumene)

– Resource: In preliminary exploration

– Equity interest6: 55.0%

Argentina

• Mariana (Brine)

– Resource1: 1.9 mt LCE


• Cauchari-Olaroz (Brine)


– Equity interest2,6: 16.93%

– Project Interest: 50%

Australia

• Mount Marion (Spodumene)


– Equity interest: 50%

• Pilgangoora Lithium-

Tantalum (Spodumene)



• (Altura) Pilgangoora Project

- Offtake (70kt Stage 1)

- Offtake (50% Stage 2)

- Resource: 0.5mt LCE

China

• Ningdu Heyuan (Spodumene)



Upstream lithium resources

Access to Secure, High Quality Supply of Lithium Raw Materials3

Resource Estimates for Lithium Hardrock Deposits5

Bubble Size = Contained LCE (Mt)

Resource Estimates for Lithium Brine Deposits5

Li 2

O%

Li ppm

Sal de Vida

Mariana

Cauchari-Olaroz

Hombre Muerto

Salar de Atacama

Silver Peak

Salar de Olaroz

0

400

800

1,200

1,600

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

Log10 (Resource Size Million Tons LCE)

0.1%

0.4%

0.7%

1.0%

1.3%

1.6%

1.9%

2.2%

2.5%

2.8%

1.0 1.5 2.0 2.5 3.0

Log10 (Resource Size Million Ton)

Greenbushes

Mt. Marion Pilbara-Pilgangoora

Wodginac

Mt. Cattlin

Mt. Holland

Val-d'Or

Cinovec

Whabouchi

Invested by Ganfeng

9

Mexico

• Sonora Lithium

• Equity Interest 29.9% in

BCN (100% owner of

Sonora Lithium)*

• 22.5% interest in Sonora

Lithium*

* Pending closing

Source: Company disclosure, CRU report.Note: 1. Neometals Ltd has an option to purchase up to 57kt dmt beginning Feb 2020. Mineral Resources Limited has option to purchase up to 51% of offtake as of Feb 2020.Note 2: Assuming 7.8t SC6% to produce 1t of LiCO3

Access to Secure, High Quality Supply of Lithium Raw Materials3

10

Company (Mine) Reed Industrial

Minerals (Mt.

Marion)

Pilbara Minerals

(Pilgangoora)

Altura Mining

(Pilgangoora)

Offtakes

Spodumene

Concentrate

(“SC”)

~450kt/yr 160kt/yr(Stage 1)

[operating]

150kt/yr (Stage 2)

50kt/yr (Stage 3)

70kt/yr (Stage 1)

[operating]

110kt/yr (Stage 2)

Term LOM (1) Stage 1: 10 years + 10

year option

Stage 2: LOM

Stage 1: Dec 2020 +

10 year extension

Stage 2: LOM

Pricing Formula – based on LiCo3 & LiOH imp/exp data

LCE Equivalent (2) 58kt

Stage 1: 20kt

Stage 2: 19kt

Stage 1: 9kt

Stage 2: 14kt

1,071

931

792

682

608

-

200

400

600

800

1,000

1,200

July - Sept Oct - Dec Jan - March April - June July - Sept

SC6 DMT Price (US$/t) Mt Marion

Source: Mineral Resources Limited

Poised to Benefit from Lower SC pricing4

11

• GFL Offtake Pricing

Formulas incorporate

trailing (import & export

carbonate and hydroxide

prices)

• SC pricing lags carbonate

& hydroxide pricing

(approx. 3-5 months)

-43% LTM

Source: Canaccord Genuity

Lowest-CAPEX Intensity for New-Build Conversion Capacity5

12

Ganfeng has an experienced in-house EPC team which has delivered industry leading

CAPEX-intensity chemical conversion capacity

Visionary and Experienced Management Team with an Established Talent Pool6

DENG Zhaonan

Vice President

(Production & Operation)

XU Jianhua

Vice President

(Engineering Construction,

Equipment Management)

SHEN Haibo

Vice President

(Sales & Battery

Department)

OUYANG Ming

Vice President

(Secretary of the Board)

YANG Manying

Vice President

(Finance)

LIU Ming

Vice President

(Production Safety &

Technology)

10+ years of industry

experience


experience


experience


experience


experience


experience

LI Liangbin

Chairman

President

• Mr. Li, our founder, has been serving as Chairman of

the Board of Directors since the incorporation of

Ganfeng

• He has been serving as Vice President of the China

Nonferrous Metal Industry Association, Lithium Branch

• Previously he worked at scientific research institute of

Jiangxi Lithium Plant, a state-owned enterprise

• He was named “Expert with Outstanding Contribution”

and was selected to join the National Talents Project in

2015

• Mr. Li was a chemistry major in college and has

extensive knowledge in lithium related chemicals

WANG Xiaoshen

Vice Chairman

Vice President

• Mr. Wang joined Ganfeng in 2006 and was

appointed Vice Chairman of the Board of Directors

in 2010

• He worked at China National Nonferrous Metals

Industrial Xinjiang Co., Ltd., Xinjiang Lithium Salts

Plant, mainly responsible for lithium business

• He obtained bachelor’s degree in industrial

engineering management from North China

University of Technology and an EMBA from the

China Europe International Business School

Nearly 30 years of

industry experience


experience

Source: Company disclosure.

13

Strong and Blue-chip Customer Base7

Extensive Product Offering

High Quality Product

Reliable Service

Rich Industry Experience

We have developed a stable blue-chip

customer base through:

14

4 Long-TermSupply Contracts (VW, BMW, Tesla,

LG Chem)

An Integral Part of the EV Supply Chain8

15

Cathode Producers

• Major Cathodes Producers

Battery Producers

• LG Chem

• Panasonic

OEMs

• Tesla

• VW

• BMW

Supply Contracts & Select Collaboration Agreements

Contract Structures Rationale

Fixed Volume Contracts Provides Ganfeng visibility and security on volumes,

long-term planning (expansions)

Market Based Pricing Majority of Contracts use a Market-Based pricing

formula

- GFL collaborates with customers to establish

long-term, joint-benefit

- GFL SC offtake pricing linked w/ Chemical

Pricing, providing margin stability

Li ChemicalsCarbonate, Hydroxide,

Metal, Fluoride

RecyclingBattery Production

(Solid Sate)

GFL Customers

Cathode Producers Battery Producers OEMs

GFL Ecosystem

An Integral Part of the EV Supply Chain8

Lithium Fluoride

16

All-China

Federation of

Industry and

Commerce

(Second Prize)

Jiangxi Province

Technological

Invention Award

(Second Prize)

China Nonferrous

Metals Industry

Association Scientific

and Technological

Progress Award

(Second Prize)


Note: 1. As of July 7, 2018.

National

Technology

Innovation

Demonstration

Enterprise

Key High-tech

Enterprise of

China Torch

Program

National

Intellectual

Property

Advantages

Enterprise

Advanced Technologies and Outstanding Research and Development9

Outstanding Research and Development Capabilities

Only company in China with both spodumene

extraction and lithium-containing brine extraction

technologies

123 patents, 5 major categories of 40+ industry leading

lithium compounds and metals1

Seeking breakthroughs and actively developing

next generation solid-state batteries

Undertaken 17 national level R&D projects and 31provincial level R&D projects

Recent Awards

220 Research and Development staff1

17

Lithium Hydroxide Capacity (Building in Flexibility)

25K LiOH 25Kt LiOH

25Kt LiOH

Lithium

Sulfate

Front EndBack End

25K LCE 25K LCE

LiOH Expansion

Existing

Carbonate Line

(Ningdu)

Lithium

Sulfate

18

3. Financial Performance

1,344

2,633

4,171

4,889

2,802

2015 2016 2017 2018 2019 H1

Proven Financial Track Record

Strong Revenue Growth Revenue | Revenue Growth(RMB mm)

Solid ProfitabilityGross Profit | Gross Profit Margin(RMB mm, %)

Outstanding Margin ProfileAdjusted EBITDA(2) | Adjusted EBITDA Margin(RMB mm, %)

Revenue Growth (Quarterly)(RMB mm)


Note: 1. All financial figures have been translated from reported RMB currency to USD according to average exchange rates across respective years. 2. Non-IFRS Adjusted EBITDA

19

22%

38%40%

36%

25%

2015 2016 2017 2018 2019 (1H)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017 2018 2019

269

954

1,6921,781

650

20% 36% 41% 36% 23%

2015 2016 2017 2018 2019 H1

3. Capacity and Production

5,000 8,000 8,000

31,000

8,000 14,000

23,000

40,500

2015 2016 2017 2018

Lithium Hydroxide Lithium Carbonate

Chemical Capacity and Production Growth

Installed Design Annual Capacity (1)

Lithium Compound Production(kt)


Note: 1. Installed Designed Annual Capacity. 2018 installed design capacity includes 20kt Hydroxide Plant planned commissioned in Q3 2018 and 17kt Carbonate Plant commissioned Q4,

2018. 20

4,517 7,978 6,917

14,736 7,943

10,275 18,298

16,325

2015 2016 2017 2018

Lithium Hydroxide Lithium Carbonate

Installed Production Capacity (Current and Near-Term)

40.5kt

Carbonate

Installed Capacity

Today

31kt

Hydroxide

New Jiangxi Plant

Target

Commissioning Q3

2020

25kt

Hydroxide

(front)

25kt

Hydroxide

(backend)

New Hydroxide Line

built with total 50kt

back-end, providing

flexibility to process

sulfate from

carbonate lines

20kt

Carbonate

50% of 40kt Planned

Production at

Cauchari, Argentina

Total Near-Term

38.5kt

Carbonate

56kt

Hydroxide

25kt

Hydroxide

22kt

Carbonate

110kt LCE

Capacity

Flexibility to

Produce

Carbonate or

Hydroxide

21

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