Longbai Group: Announcement on the establishment of subsidiaries

Securities code: 002601 securities abbreviation: Longbai group announcement code: 2023-119

Announcement of Longbai Group Co., Ltd. on the establishment of a subsidiary company

The Company and all members of the board of directors guarantee that the disclosure of information is true, accurate and complete, and that there are no false records, misleading statements or material omissions.

The Seventh meeting of the eighth session of the Board of Directors and the Seventh meeting of the eighth Board of Supervisors held by Longbai Group Co., Ltd. (hereinafter referred to as "the company") on October 18, 2023 examined and passed the "bill on the establishment of subsidiaries". The details are as follows:

I. Overview of outward Investment

According to the needs of the company's business and strategic development, in order to further strengthen the company's raw material supply capacity and implement the innovation-driven green development strategy, the company's subsidiary Wudingguo Titanium Metal Co., Ltd. (hereinafter referred to as "Wuding GuoTi") plans to invest 270 million yuan to set up a wholly-owned subsidiary Yunnan National Titanium Resources Development and Management Co., Ltd. (hereinafter referred to as "National Titanium Resources") National Titanium Resources and Wuding Mineral Resources Development Co., Ltd. (hereinafter referred to as "Wuding Mineral Investment") jointly contribute 300 million yuan to establish Wuding National Titanium Mineral Co., Ltd. (hereinafter referred to as "Wuding Mineral"). Its Chinese titanium resources contributed 270 million yuan and Wuding Mine contributed 30 million yuan.

In accordance with the articles of Association and the rules on Stock listing of the Shenzhen Stock Exchange and other relevant provisions, the above-mentioned outward investment matters need not be submitted to the shareholders' general meeting for consideration.

This investment does not constitute a related party transaction, nor does it constitute a major asset reorganization as stipulated in the measures for the Administration of Major Asset reorganization of listed companies.

II. Basic information of the proposed company

Yunnan National Titanium Resources Development and Management Co., Ltd.

1. Company name: Yunnan National Titanium Resources Development and Management Co., Ltd.

2. Company type: limited liability company

3. Registered capital: 270 million yuan

4. Legal representative: Li Jianjun

Registration place: Shishan Town, Wuding County, Chuxiong Yi Autonomous Prefecture, Yunnan Province

Business scope: non-coal mining of mineral resources, commonly used non-ferrous metal smelting; non-ferrous alloy manufacturing; non-ferrous metal Calendering processing; non-ferrous metal casting; non-ferrous alloy sales; mineral processing; metallurgical special equipment sales; metallurgical special equipment manufacturing; metal material manufacturing; new material technology research and development; high performance non-ferrous metal and alloy materials sales; metal ore sales; mining machinery manufacturing Mining machinery sales; oven, furnace and electric furnace manufacturing; oven, furnace and electric furnace sales.

7. The name, registered address, business scope and business term of the company shall be subject to the approval and registration of the company registration authority.

8. Equity ratio: Wudingguo Titanium holds 100% shares

Long bai group co., Ltd.

99.58% Yunnan Metallurgical Xinli Titanium Industry Co., Ltd. 100% 45.53% Longbailufeng Titanium Industry Co., Ltd. 5.46% Yunnan National Titanium Metal Co., Ltd. 100%

5.46%

Wudingguo Titanium Metal Co., Ltd.

100%

Yunnan National Titanium Resources Development and Management Co., Ltd.

(2) Wudingguo Titanium Mineral Co., Ltd.

1. Company name: Wuding National Titanium Mineral Co., Ltd.

2. Company type: limited liability company

3. Registered capital: 300 million yuan

4. Legal representative: Li Jianjun

Registration place: Wuding County, Chuxiong Yi Autonomous Prefecture, Yunnan Province (specific location to be determined)

6. Business scope: licensed projects: mining of non-coal mine mineral resources (projects that must be approved according to law can only be approved by relevant departments, the specific business projects shall be subject to the approval documents or permits of relevant departments) General projects: common non-ferrous metal smelting; non-ferrous alloy manufacturing; non-ferrous metal Calendering processing; non-ferrous metal casting; non-ferrous alloy sales; mineral processing Metallurgical special equipment sales; metallurgical special equipment manufacturing; metal material manufacturing; new material technology research and development; high-performance non-ferrous metals and alloy materials sales; metal ore sales; mining machinery manufacturing; mining machinery sales; oven, furnace and electric furnace manufacturing; oven, furnace and electric furnace sales (except for projects that must be approved according to law, carry out business activities independently on the basis of business license).

7. The name, registered address, business scope and business term of the company shall be subject to the approval and registration of the company registration authority.

8. Proportion of shares:

Serial number shareholder name subscribed contribution (ten thousand yuan) shareholding ratio

1 country titanium resources 27000 90%

2 Wuding mine investment 3000

Total 30000

The information of the above two proposed companies shall be subject to the approval and registration of the administrative department for industry and commerce.

III. Basic information of the partners

1. Company name: Wuding Mineral Resources Development Co., Ltd.

2. Unified social credit code: 91532329MAC4D70L4T

3. Establishment date: December 15, 2022

Registration place: Shishan Yingxiang Hotel, Shishan Town, Wuding County, Chuxiong Yi Autonomous Prefecture, Yunnan Province

5. Legal representative: ni Wenxiong

6. Registered capital: 10 million yuan

Business scope: licensed projects: mining of non-coal mine mineral resources (except rare earth, radioactive mineral, tungsten); mineral resources exploration (except rare earth, radioactive mineral, tungsten); mineral resources exploration Mining of non-coal mine mineral resources (projects that must be approved according to law can only carry out business activities with the approval documents or permits of relevant departments.) General projects: mineral processing (except rare earths, radioactive minerals, tungsten); mineral processing; manufacturing of non-metallic mineral products; sales of non-metallic minerals and products; sales of building decoration materials; processing of building stones; sales of building materials Internet sales (except for goods that require permission); sales of arts and crafts and etiquette products (except ivory and its products); sales of daily ceramic products; mineral washing processing (except rare earth, radioactive mineral, tungsten); mineral washing processing; precious metal smelting (except rare earth, radioactive mineral, tungsten); mineral resources reserves assessment services; metal ore sales; mineral resources reserves estimation and reporting services Mining rights assessment services; sales of new ceramic materials; sales of civil aviation materials; sales of new metal functional materials; manufacture of arts and crafts and ceremonial articles (except ivory and its products); social and economic consulting services (except for projects that must be approved according to law, independently carry out business activities on the basis of business license).

8. Ownership structure:

Wuding County Finance Bureau

100%

Wuding Xinwu Industrial Investment and Operation Co., Ltd.

100%

Wuding Mineral Resources Development Co., Ltd.

9. Wuding Mining Investment Mineral Resources Development Co., Ltd. has no relationship with major shareholders, directors, supervisors, senior managers and so on.

10. Wuding Mining Investment Mineral Resources Development Co., Ltd. is not the executor of bad faith.

IV. The main contents of the Joint Venture Cooperation Agreement

The main contents of the Joint Venture Agreement with Wuding Mining Investment to form a joint venture company of Wuding Minerals are as follows:

Party A: Wuding National Titanium Metal Co., Ltd.

Party B: Wuding Mining Investment Mineral Resources Development Co., Ltd.

Through friendly negotiation between Wudingguo Titanium Metal Co., Ltd. (hereinafter referred to as "Wuding Titanium") and Wuding Mineral Resources Development Co., Ltd. (hereinafter referred to as "Wuding Mineral Investment"), it is proposed to cooperate in the ilmenite placer project in Wuding County, Chuxiong Yi Autonomous Prefecture, Yunnan Province.

In order to give full play to the advantages of Party An and Party B in their respective industries and resources, after consultation, Party An and Party B agreed to jointly contribute to the establishment of Wuding National Titanium Mineral Co., Ltd. (hereinafter referred to as the "joint venture company"). Party A may also designate its subordinate holding subsidiary as the investor to establish a joint venture company with Party B.

(1) basic information

1. After full consultation, both parties have agreed to jointly invest and set up a joint venture company in Wuding County, Chuxiong Yi Autonomous Prefecture, Yunnan Province in accordance with relevant laws and regulations.

The basic information of the proposed joint venture company is as follows:

(1) name: Wuding National Titanium Minerals Co., Ltd. (final industrial and commercial audit name shall prevail)

(2) registered address: Wuding County, Chuxiong Yi Autonomous Prefecture, Yunnan Province (specific location to be determined)

(3) scope of business: licensed projects: mining of non-coal mine mineral resources (projects that must be approved according to law can only be approved by relevant departments, the specific business projects shall be subject to the approval documents or permits of relevant departments) General projects: common non-ferrous metal smelting; non-ferrous alloy manufacturing; non-ferrous metal Calendering processing; non-ferrous metal casting; non-ferrous alloy sales; mineral processing Metallurgical special equipment sales; metallurgical special equipment manufacturing; metal material manufacturing; new material technology research and development; high-performance non-ferrous metals and alloy materials sales; metal ore sales; mining machinery manufacturing; mining machinery sales; oven, furnace and electric furnace manufacturing; oven, furnace and electric furnace sales (except for projects that must be approved according to law, carry out business activities independently on the basis of business license).

(4) term of operation: long term.

(5) the name, registered address, business scope and business term of the joint venture company shall be subject to the approval and registration of the joint venture company registration authority.

2. The shareholders of the joint venture company shall be responsible for the joint venture company within the limit of its subscribed capital contribution, and the joint venture company shall be responsible for the debts of the joint venture company with all its assets, and the joint venture company shall have the status of an independent legal person.

(2) registered capital and ownership structure

1. The registered capital of the joint venture company is RMB 300000000.00 (capital: RMB 300 million). The registered capital and subsequent capital investment shall be timely invested according to the proportion of equity according to the progress of the project.

2. The amount of capital contribution, the form of capital contribution and the proportion of shares held by the parties are as follows:

Shareholder name subscribed contribution (ten thousand yuan) proportion of shares in the form of capital contribution

Wuding Guoti or Wuding Guoti subsidiary 27000 currency funds 90%

Wuding Mine invests 3000 yuan and 10% of the capital.

Total 30000-100%

3. adjustment of equity ratio: approved by both shareholders, the registered capital shall be paid in full and in time in accordance with the provisions of this agreement. If Party B fails to pay the registered capital in full within the agreed time limit in accordance with this Agreement, Party B shall transfer the equity corresponding to the unpaid capital contribution to Party A free of charge, and Party B shall cooperate with Party A to complete the transfer formalities, after the completion of the transfer, Party A has the obligation to actually pay this part of the capital contribution.

During the existence of the joint venture company, neither party may transfer or transfer its shares and interests in the joint venture company to any third party without the consent of the other parties. If it is really necessary to transfer or transfer to foreign countries, under the same conditions, the counterparty to this agreement shall have the right of preemption.

4. use of registered capital: the joint venture company is an independent legal entity. No matter how the two parties contribute, the use of the funds shall be uniformly arranged by the joint venture company for the investment, construction, production and operation of the joint venture project.

5. Increase or decrease of registered capital. The increase or decrease of the registered capital of the joint venture company shall be approved by the shareholders of both parties through consultation. When increasing or reducing capital, both parties shall increase or reduce capital in the same proportion according to the proportion paid by that party in the registered capital of the joint venture company, and shall vote, examine and approve, notify creditors and register changes in accordance with the decision-making procedures stipulated in the articles of association of the joint venture company.

(3) Governance structure

1. In accordance with the provisions of relevant laws and regulations, the joint venture company shall establish a shareholders' meeting, a board of directors, a board of supervisors and an operation and management organization.

2. Shareholders' meeting: the shareholders' meeting of the joint venture company shall be composed of Party An and Party B, and both parties shall exercise the following functions and powers in accordance with the proportion of actual capital contribution. The shareholders' meeting shall make a resolution on the matters discussed, and the resolution shall be adopted by the votes of the shareholders representing more than half of the voting rights. However, the amendment of the articles of association, the increase or decrease of registered capital, and the merger, division, dissolution or change of the form of the joint venture must be approved by shareholders representing more than 2/3 of the voting rights.

3. The board of directors: the joint venture company shall have a board of directors with 3 members, which shall be elected by the shareholders' meeting. 2 persons are recommended by Wuding Guoti or its subsidiary holding subsidiary, and 1 person is recommended by Wuding Mining Investment Co., Ltd., and the chairman is a director recommended by Wuding Guoti or its subsidiary holding subsidiary. The term of office of a director shall be three years and shall expire and shall be eligible for re-election. When voting on a resolution of the board of directors, each member shall have one vote. The meeting of the board of directors shall be attended by more than half of the directors, and the decision on the matters discussed shall be valid only if it is voted by more than half of the directors.

4. Board of supervisors: the joint venture company shall set up a board of supervisors with 3 members, 1 person recommended by Wuding Guoti or its subsidiary holding subsidiary, 1 person recommended by Wuding Mining Investment Co., Ltd., and 1 employee representative. The board of supervisors shall have a chairman, who shall be the supervisor recommended by Wuding Guoti Company or its holding subsidiary. The term of office of supervisors shall be three years and shall expire and shall be eligible for re-election.

5. The joint venture company shall have one general manager and one temporary deputy general manager, who shall be appointed or dismissed by the board of directors; if necessary, the deputy general manager may increase the number of persons, but the maximum number shall not exceed 5. The general manager and deputy general manager shall be recommended by Wuding Guoti or its holding subsidiaries. The general manager and deputy general manager shall be assessed by the board of directors.

6. The joint venture company shall have a financial director, who shall be recommended by Wuding Mining Investment and appointed or dismissed by the board of directors; and a financial staff member of Wuding Guoti or a holding subsidiary of Wuding Guoti shall be appointed or dismissed by the general manager.

(4) liability for breach of contract

1. If any shareholder fails to perform the capital contribution obligation as agreed, or withdraws the capital contribution, he shall not participate in the profit distribution of the joint venture company, the preferential subscription of new shares or the distribution of the remaining property, and shall also be liable for compensation if he causes losses to the shareholders of other parties.

2. Any losses and expenses suffered by the other party as a result of the breach of contract by either party shall be borne by the defaulting party, including, but not limited to, losses, legal fees, legal fees, notarization fees, preservation fees and other expenses.

(5) changes in the agreement

During the performance of this Agreement, if any party needs to change this Agreement due to special circumstances, the changing party shall promptly notify the other parties in writing and, with the consent of both parties, the two parties shall sign a written change agreement within the prescribed time limit (within 15 days after the written notice is issued), which will become an integral part of this Agreement. Neither party has the right to change this agreement without the written documents signed by both parties, otherwise, the economic losses caused by the other party shall be borne by the responsible party.

V. the purpose of establishing a subsidiary and its impact on the company

The establishment of National Titanium Resources is to further protect the raw material supply capacity of titanium concentrate and high titanium slag, reduce production costs, expand competitive advantage and improve profitability according to the needs of the company's business and strategic development.

The company has a sponge titanium production base in Yunnan Province, and Wuding Mine Investment Co., Ltd. jointly funded the establishment of Wuding Mineral in order to speed up the development and utilization of titanium resources in Wuding County, Yunnan Province, and to explore and exploit the titanium resources in Wuding County. to ensure the supply of titanium ore and promote the high-quality economic and social development of Wuding County at the same time.

This investment by the subsidiary with its own funds will not adversely affect the financial and operating conditions of the company and its subsidiaries, and there will be no harm to the interests of the company and all shareholders.

VI. The main risks of outbound investment

The establishment of subsidiaries in this foreign investment may face risk factors such as operation management, internal control and industry policies in the actual business process. The company will strengthen its corporate governance structure, establish a sound internal control process and effective supervision mechanism, optimize the overall allocation of resources, clarify business strategy and market positioning, and prevent and deal with various risks.

VII. Documents for reference

1. Resolution of the Seventh meeting of the eighth Board of Directors of the Company

2. Resolution of the Seventh meeting of the eighth Supervisory Board of the Company.

It is hereby announced.

Board of Directors of Longbai Group Co., Ltd.

October 18, 2023