Graphex Group Announces Expansion Plan for its Graphite Processing Facility

By Patricia Miller

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Through an MOU with the Jixi Mashan Government, Graphex Group will increase annual production output by 30,000 metric tons per annum of spherical graphite.

Graphex Group Announces Expansion Plans for its Graphite Processing Facility in China to Meet Increasing Global Demand from EV Battery Production

Through a newly signed MOU with the Jixi Mashan Government, Graphex Group will increase annual production output by 30,000 metric tons per annum of high-purity spherical graphite over the next three years

Royal Oak, Michigan – February 15, 2022 Graphex Group Limited (“Graphex”) (OTCQX: GRFXY | HKSE: 6128), has entered into an exclusive non-binding memorandum of understanding (MOU) with the Municipal Government of Mashan District, Jixi City, Heilongjiang, PRC (the “Jixi Mashan Government”) with the intention of expanding its graphite processing and production capacity within the Jixi Mashan Graphite Industrial Park. Graphex currently produces 10,000 metric tons per annum (TPA) of high-purity spherical graphite (SG) at its existing facilities in Jixi. The SG is further upgraded with pitch coating to exacting specifications at nearby facilities to create the coated spherical graphite (CSG) that provides the optimum electrical properties for use in Lithium-ion (Li-ion) batteries. The expansion delineated in the MOU will allow Graphex to ramp up its annual production level of SG from 10,000 TPA to 40,000 TPA and create in-house production of an additional 10,000 TPA of CSG over and above its existing offsite CSG capabilities. Phase 1 of the SG expansion is intended to be operational by early 2023.

Under the MOU for the intended expansion plans, the Jixi Mashan Government would provide Graphex with three blocks of newly constructed industrial facilities and workshops totaling approximately 160,000 square feet within the Jixi Mashan Graphite Industrial Park. The Jixi Mashan Government will also assist Graphex in the site selection process, preliminary approval, policy support, and will coordinate with relevant governmental departments in support of the proposed project. Graphex will be responsible to obtain all appropriate approvals for the development and construction of the project as well as the costs of the facility construction. The final site selection for the project will be subject to final approval.

CSG is the principal anode material used in lithium-ion (Li-ion) batteries for electric vehicles (EVs), renewable energy storage, and other use cases. Over the next ten years, analysts forecast EV sales to increase more than 29%. Global EV sales are expected to increase from about 2.5 million in 2020 to 11.2 million in 2025, and triple to 31.1 million by 2030. By 2030, it is also expected that EVs will represent approximately 32% of the total market share for new car sales. As plans for new battery gigafactories continue to rise to meet the increasing demand for EVs, the demand for the component materials such as CSG is also expected to increase.

Graphex’s announcement of its plans to increase SG and CSG production in Jixi supports its recent announcement of its plans to construct a CSG production facility in the U.S. as well as its announcement of an agreement with Desatec to accelerate distribution of its products and production capabilities globally.

“As EV projections increase, capacity for SG and CSG processing will need to increase in parallel to support the demand. The MOU with the Jixi Mashan Government, coupled with our ability to export directly, will allow Graphex to invest in the growth of our proven manufacturing and production capacity to meet global demand in the near-term, and as we simultaneously endeavor to diversify our upstream raw material suppliers to include resources from other countries, we expect to deliver long-term, stable supply to our customers as demand increases in the future,” said John DeMaio, President of the Graphene Division of Graphex. “The graphite required for use in Li-ion batteries is highly specialized and quite challenging to produce at scale, making the mid-stream processes of spheronization, purification, and pitch coating as much an art as science. To create consistent, high-quality anode materials at high volumes and to be able to replicate that process globally requires the skill, experience, equipment, and technology that Graphex has acquired, developed, and perfected over more than a decade.”

Graphex is a global leader in the industry and has been proficient in graphite processing in Jixi since 2008 and transacting commercially since 2013. The Company’s senior executives include individuals with proven sophisticated knowledge and experience in the science and manufacturing methodology for producing SG and CSG at scale. Graphex’s technology is protected by 23 patents and utility models in PRC, covering processing equipment, manufacturing techniques and graphene applications. Through the announced expansion, Graphex intends to maintain its pivotal position as a dependable supplier in the anode material processing industry.

About Graphex Group

Graphex Group Limited is a Cayman Island company with principal and administrative offices in Hong Kong and subsidiary office in Royal Oak, MI. Graphex is focused on the development of technologies and products for the enhancement of renewable energy, particularly the enrichment of spherical graphite and graphene, key components for EV batteries and lithium-ion batteries for other use cases. With our current manufacturing facility in Heilongjiang Province, we are strategically located near one of the world’s largest high-quality sources of natural flake graphite raw material. Graphex Group is currently among the top suppliers of specialized spherical graphite to the EV and renewable energy industries and holds 23 patents in areas including products, production methods, machinery design and environmental protection.

Safe Harbor Statement

This press release is being made pursuant to, and in accordance with, Rule 135 under the Securities Act of 1933, as amended (the 'Securities Act'), and shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act.

Statements about the Company's future expectations and all other statements in this press release other than historical facts, are 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbors created thereby.

The above information contains information relating to the Company that is based on the beliefs of the Company and/or its management, as well as assumptions made by any information currently available to the Company or its management. Without limiting the foregoing, the planned construction of a facility is subject to construction and permitting delays as well as any other condition that materially impacts construction of a facility, including government approvals, financing and any litigation. When used in this document, the words 'anticipate,' 'estimate,' 'expect,' 'intend,' 'plans,' 'projects,' and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current view of the Company regarding future events and are subject to certain risks, uncertainties and assumptions, including the risks and uncertainties noted. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or projected. In each instance, forward-looking information should be considered in light of the accompanying meaningful cautionary statements herein. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, the impact of competitive services and pricing and general economic risks and uncertainties.

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