SOUTH GRAPHITE CO., LTD

Founding Background

In November of 2010, People's Government of Hunan Province had built a strategic partnership and deep collaboration with China National Building Material Group Corporation, which is China central enterprise, directly under the State-owned Assets Supervision and Administration Commission. To speed up the process of new industrialization in Chenzhou city and promote local economic development, a strategic cooperation framework agreement on building up China's largest graphite industrial base has been signed by Mr. Xiang Lili, Mayor of Chenzhou Municipal Government and Mr. Cao Jiang-Lin, the director and president of CNBM.

Introduction of SOUTH GRAPHITE CO., LTD

In March of 2011, South Graphite Co., Ltd. is incorporated in Chenzhou City, Hunan Province, China, with registered capital of 1 billion yuan. South Graphite Co., Ltd., as a resource investment platform of CNBMI, is committed to actively promote the consolidation of graphite industrial resources and technological progress, and carry out a comprehensive consolidation and integration of graphite resources in the areas of Lutang Town and Heye, Taihe, Qinghe village (referred to as "Lu He Tai Qing mining area") of Chenzhou city, to make the graphite business in Chenzhou area stronger, better and bigger and further lead healthy and sustainable development of the graphite industry.

South graphite planned to have the capacity of 2.07 million tons annually, of which, 11 coal mines can produce 1.56 million tons/year, 9 graphite mines 510 thousand tons/year. The next three years, South Graphite will invest 3 billion to build up the fine and deep processing chain of graphite, make the radical improvement in graphite industry of Chenzhou.

Production Base—LUHE TAI MINING AREA

The ore production base of South Graphite Co., Ltd. is located in Lu He Tai mining area in Chenzhou city, Hunan Province. It's only 50 KM from Chenzhou downtown. The mining area stretches from north-south about 20KM, and with the width of 2.15 km on average from east-west. Its total area is around ?? 45 square kilometers. In 1985, the State Geological Bureau proved the mining reserves of 34.07 million tons of graphite, which consisted of 72.5% of total proven reserves of amorphous graphite in China.

The products in Luhe Tai mining area is high-grade mineral. Containing 80% fixed carbon on average, 92% on highest. It is well known for good quality.

According to estimation recently, the mining reserves of 25.151 million tons of coal and 12.469 million tons of graphite in the scopes which have mineral rights. Outside the scopes which have mineral rights, detailed investigation has reached 8.87 million tons of coal reserves, 5.12 million tons of graphite reserves. And forecast that the mining reserves of 16.33 million tons of coal, 9.53 million tons of graphite in the deep mining area.

Deep processing & R&D Base

South Graphite Co., Ltd plans to invest 3 billion yuan in the next three years, building a national Graphite Industrial Park in Chenzhou City, which will cover 200 hectares, consisting of graphite processing, research and development, trade and logistics.

Initial stage the industrial park covers an area of 100 mu and the factory building area is about 20,000m2. Currently the industrial park has carbon briquette production line, which the annual output of 300,000 tons; granular graphite production line, which the annual output of 150,000 tons; and graphite powder production line that annual output of 50,000 tons.