Sitong New Metal to divest stake in subsidiary, forming connected guarantees

Hebei Sitong New Metal Material (the "Company") plans to sell a 36.72% stake in its controlled subsidiary, Shandong Lizhong New Energy Materials Co., Ltd. ("Shandong Lizhong"), to Xianghe Kunlun New Energy Materials Co., Ltd. ("Kunlun New Material") for 22,769,918.08 yuan. Concurrently, the Company will acquire a 16.5% stake in Shandong Lizhong from Gong Zhiwen for zero consideration, and invest an additional 78,094,100.00 yuan in cash into Shandong Lizhong.

Upon completion, the Company's ownership in Shandong Lizhong will decrease to 45.1546%, reclassifying Shandong Lizhong from a controlled subsidiary to an associate. This change will remove it from the Company's consolidated financial statements. This will also result in existing guarantees of 690,000,000.00 yuan provided by the Company for Shandong Lizhong's bank loans becoming connected guarantees. As of October 31, 2025, Shandong Lizhong's outstanding bank loans amounted to 188,057,850.13 yuan.

The Company will continue to provide proportionate liability guarantees for Shandong Lizhong based on its revised equity stake, and offer joint and several liability guarantees for new bank credit, capped at 45,000,000.00 yuan, valid for three years from the approval of the third extraordinary general meeting in 2025. Kunlun New Material will provide a counter-guarantee for 55% of the existing bank loans.