"PPT Lithium King" Delays Again

Just like the widely criticized "PPT car making," the "PPT Lithium King" has contributed quite a few jokes to the lithium industry, and now it has once again "jumped the ticket."

At the 2024 semi-annual performance briefing held by Tibet Zhufeng on October 21, investors' focus was still on the lithium extraction project from the Argentine salt lake - as expected, the project was "delayed" again.

Zhu Feng's chairman, Huang Jianrong, stated that the lithium extraction project from the Argentine salt lake "has not progressed as expected due to various factors." However, he did not respond to key issues such as the latest progress of the project and the expected production time. Tibet Zhufeng, which had already secured lithium mines in South America as early as 2021, is still talking about "lithium dreams" to this day.

The Origin of "PPT Lithium King"

It's a miracle that Tibet Zhufeng, with a bumpy past, has managed to survive until now.

The company, established in 1998, went public in 2000 and initially focused on motorcycles and related parts. However, due to smuggling issues, the original founder and executives were imprisoned, and the company fell into difficulties. In 2004, with Huang Jianrong taking over with Ta Cheng International, the company immediately transformed into a non-ferrous metal mining and smelting production company.

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Tibet Zhufeng, with its keen observation of the lithium cycle, entered the lithium resource field in 2018 by acquiring 100% equity of the Canadian listed company Li-X through a 45% stake in a participating company, obtaining the rights and interests of the two major lithium salt lake projects in Argentina, SDLA and Arizaro. Among them, the SDLA project has a large salt lake resource reserve and high grade, with a planned production capacity ranking among the top of salt lake projects in Argentina.

With the rise in lithium prices, Tibet Zhufeng started the development of these two salt lake projects in 2021, planning to raise 8 billion yuan through a non-public offering to build a salt lake lithium extraction project with an annual output of 50,000 tons of lithium carbonate. According to the relevant plan, the project was originally scheduled to complete a lithium carbonate production capacity of 25,000 tons/year by the end of 2022, and another 25,000 tons in the first quarter of 2023. This goal sparked expectations in the lithium resource market, and the company's stock price soared by nearly 260%.

However, three years have passed, and the project has not only failed to start as scheduled but also faced a series of difficulties in advancement - the progress of the private placement has been slow, and the source of funds is difficult to resolve. At the same time, the company has successively "joined hands" and "broken up" with several partners such as Songdu Lithium Science, Qidi Qingyuan, Zhongzhong Shares, and China Electric Power Construction International, and the environmental assessment has also lagged far behind expectations.Nowadays, the production capacity of this project has also been reduced from an annual output of 50,000 tons of lithium carbonate to 30,000 tons, and the start of construction is still far away.

Under this series of changes, Tibet Summit, which originally had "lithium," has greatly reduced its image in the minds of investors and has been jokingly called the "PPT Lithium King." As a result, the stock price has been directly halved from its peak.

Financing difficulties: No money to mine lithium

The repeated delays in Tibet Summit's salt lake lithium extraction project are fundamentally due to funding issues.

In March of this year, Tibet Summit announced that the 8 billion yuan of funds planned to be raised through a private placement in 2021 had completely failed, and the shortage of funds directly led to the project being unable to start. The so-called financing difficulties are actually related to the serious defects in Tibet Summit's own information disclosure and internal control issues.

In terms of contract performance, Tibet Summit has repeatedly fallen into a crisis of trust. For example, it signed a supply contract with Blue Dawn Technology in 2022, but the company did not disclose the progress of performance in a timely manner until it was inquired by the regulatory authorities and then supplemented the disclosure. Similarly, the cooperation agreements signed with Qidi Qingyuan and Songdu Shares were not disclosed on time when the deadline expired, but instead misled investors on the SSE E-interaction platform, claiming that the relevant contracts were progressing normally, and then unilaterally announced the termination of the agreements.

In terms of financial data and information disclosure, Tibet Summit also has serious problems. The subsidiary, Tazhong Mining, adjusted the depreciation period without fulfilling the review procedures and information disclosure obligations. The suspension of the environmental assessment application for the Argentine salt lake project and the daily related transactions were also not disclosed in a timely manner, leading to regulatory warnings for the company's senior management.

In addition, the company also exceeded the amount of related transactions that had been reviewed and disclosed, and the excess part was not fulfilled in a timely manner through the review procedures and disclosure obligations. This led to inaccurate financial data in the 2017 annual report, the 2018 semi-annual report, and the annual report for subjects such as fixed assets and construction in progress, and once again received regulatory warnings from the Shanghai Stock Exchange.

What is even more exaggerated is that before the company announced the termination of the financing project, the shares of the controlling shareholder, Tacheng International, were successively frozen, and the company still did not inform in a timely manner, resulting in another disciplinary warning from the Shanghai Stock Exchange. Under these series of problematic operations, how can the financing progress smoothly? Tibet Summit, seeing no hope, can only announce the failure of the private placement.

How long can the big pie drawing last?After years of clamoring about lithium mines without making a penny, it has managed to reap a wave of capital dividends through lithium concept stocks—some investors directly vented their anger in the comments section of the latest news, targeting Tibet Summit: "How long do you plan to keep drawing the big picture?"

At present, it seems that the time left for Tibet Summit to draw its big picture is indeed running out. Over the years, the external market environment has undergone earth-shaking changes. A few years ago, the lithium battery industry was still a "hot cake" in the capital market, but with the imbalance of supply and demand last year leading to a significant drop in lithium prices, the entire industry quickly shifted to a destocking mode.

According to the analysis by Mo Ke, the founder of True Lithium Research, the lithium resource industry's profit cycle is usually 1-2 years, followed by a loss period of 2-3 years. This means that even if Tibet Summit's lithium extraction project from salt lakes is immediately advanced, it is difficult to catch up with the golden period of lithium prices, let alone the fact that it is still indefinitely stuck in the "progress not meeting expectations" stage.

Therefore, both investors and the market are skeptical about the prospects of the company's salt lake project. Although the company's secretary of the board's latest response stated that the construction of the company's overseas salt lake project is not affected by market supply and demand, and plans to accelerate investment during the industry's low point to quickly form production capacity with low-cost core competitiveness, the credibility of this response is not very high given the company's past concealment in information disclosure and internal control.

In addition, setting aside the salt lake project, Tibet Summit itself is also about to become one of the topics in the A-share market. Not to mention the distant past, in April, Tibet Summit published an announcement titled "Decision of Tibet Securities Regulatory Bureau on Regulatory Talks with Listed Company Executives," which contained multiple textual errors, such as the secretary of the board's name being incorrectly marked as "Hu Hadong," "Hu Sha Dong," and "Hu Bing Dong." This rare low-level mistake also made Tibet Summit a "hot topic" in the A-share market.

From these details, it can be seen that Tibet Summit has not yet faced the serious problems it has in internal control and information disclosure. Coupled with the lithium battery industry entering a downcycle, the future prospects of Tibet Summit's salt lake project are also not bright. This project, which had the opportunity to make a fortune with the advantages of Argentine salt lakes, is now facing difficulties again due to repeated delays.