Longbai Group sells its iron oxide business

Announcement of Longbai Group Co., Ltd. on the Sale of Subsidiary Companies and Subscription of Huayuan Pigment Shares

1、 Overview of the sale of subsidiary companies and subscription of Huayuan Pigment shares

In order to further focus on the main business and improve the level of professional operation, the company will transfer 77.50% equity of Jiaozuo Baili United Pigments Co., Ltd. (hereinafter referred to as "Baili United") to Zhejiang Huayuan Pigments Co., Ltd. (hereinafter referred to as "Huayuan Pigments") at a transfer price of RMB 155 million. At the same time, the company and other shareholders waive the right of first refusal for the transfer of equity by Baili United shareholders. After the completion of this transfer, the company will no longer hold the equity of Baili United, and Huayuan Pigment will hold 100% equity of Baili United.

In order to expand the downstream application scope of the company's by-product ferrous sulfate and strengthen cooperation with Huayuan Pigment in the field of iron oxide pigments, the company plans to subscribe to 6.5217 million new shares of Huayuan Pigment's targeted issuance, with a subscription price of 6 yuan per share and a subscription price of 39.1304 million yuan. After the completion of this capital increase, the company will hold an 8% equity stake in Huayuan Pigments.

The subscription fee for the company's subscription of Huayuan Pigments shares shall be deducted from the equity transfer fee for the transfer of Baili United. Huayuan Pigments shall pay the remaining equity transfer fee of RMB 115.8696 million to the company in cash.

***The financial data for the past two years are as follows:

Unit: RMB 10000

Number Project December 31, 2021 December 31, 2020

1. Total assets 18142.03 11952.52

2. Total accounts receivable 1805.68 2808.90

3. Total liabilities 5622.91 1556.39

4. Total owner's equity 12519.12 10396.13

Number Project 2021 Year 2020 Year

1. Operating revenue 23968.25 15134.71

2. Operating profit 3479.98 2718.76

3. Net profit 2625.62 2023.43

Net cash flow generated from operating activities 2208.42 2479.93

Contribution amount (10000 yuan) Shareholding ratio Contribution amount (10000 yuan) Shareholding ratio

1 Longbai Group Co., Ltd. 6200 77.50% --

2 Tang Zhonglei 1000 12.50% --

3 Deqing United Pigment Co., Ltd. 800 10.00% --

4 Zhejiang Huayuan Pigment Co., Ltd. -8000 100%

Total 8000 100% 8000 100%

14. There is no related relationship between other shareholders of Baili United and the controlling shareholders, actual controllers, directors, supervisors, senior management personnel, etc. of the company.

15. Baili United is not a dishonest debtor.