Chengxin Lithium Group Co., Ltd. (SZSE: 002240) is moving to address a long-standing weakness through capital markets: its lithium resource self-sufficiency rate. In an updated private placement draft disclosed on September 8, the company raised its fundraising target from a previous cap of RMB 3.2 billion to no more than RMB 5.3 billion, a 65.63% increase. The use of proceeds has also been revised, with the new funds, after issuance costs, earmarked for the Muchuan lithium mine mining, processing, and tailings project, as well as working capital replenishment. Specifically, RMB 3.71 billion is allocated for the mine project and RMB 1.59 billion for working capital. The issuance method has shifted from a fixed-price to a competitive bid process, with corresponding changes to the target investors.

This marks the largest private placement initiative in Chengxin Lithium's history, significantly exceeding its previous fundraising efforts. Originally listed on the Shenzhen Stock Exchange in 2008 as Weihua Holdings, the company's initial business was the production and sale of medium and high-density fiberboard, alongside forest planting and sales. Between 2016 and 2017, the Shengdun Group took control of Weihua through a three-step strategy involving share transfers, voting rights delegation, and a private placement subscription. This move placed mining magnate Yao Xiongjie at the helm of both Shengdun Mining (SH: 600711) and Weihua through the Shengdun Group, forming the "Shengdun system" capital network. Subsequently, Weihua initiated a series of capital operations, progressively transitioning its core business from artificial boards and timber to lithium battery new energy materials. In November 2020, the company was renamed Chengxin Lithium, focusing on lithium mining and processing, basic lithium salt and metal lithium production, with key products including lithium carbonate and lithium hydroxide used primarily in EV power batteries and energy storage.

Regarding its core assets, Chengxin Lithium holds several lithium resources: the OINOC Mining (Yelonggou spodumene deposit) in Sichuan, the Sabi Star Mine in Zimbabwe, the Muchuan lithium mine in Sichuan (under construction), and the SDLA salt lake in Argentina. Its lithium salt production capacity includes Zhiyuan Lithium (Deyang, Sichuan, 42,000 tons), Suining Shengxin (30,000 tons), and Shengto (Indonesia, 60,000 tons of lithium hydroxide), plus 500 tons per year of metal lithium capacity (planned to expand to 3,000 tons). Total capacity stands at 137,000 tons.

Despite this, the company's resource self-sufficiency rate remains a critical shortfall. Chengxin Lithium has never disclosed an exact figure, but at an April 7 earnings call, it mentioned that its Zimbabwe mine's capacity could cover only about one-third of the lithium ore needed for its 2026 lithium salt production. Additional raw materials come from the domestic OINOC mine, purchased ore, and some toll manufacturing. Based on this, the self-sufficiency rate is estimated at 40%-45% (subject to official data). In 2024, when lithium carbonate prices fell to RMB 70,000-80,000 per ton, Chengxin Lithium's lithium product gross margin was just 2.84%, compared to 35.21% for Tianqi Lithium, which has a high self-sufficiency rate. In H1 2026, Chengxin Lithium's lithium product output reached 56,500 tons, a 68.63% year-on-year increase, further widening the gap in purchased ore requirements.

The strategic intent behind the new placement is evident. A senior financial professional in Sichuan's capital market noted on September 9 that the shift from "fixed-price placement to lock in customers" to "competitive bidding to bind the controlling shareholder" signals a change in approach. The company is no longer using the placement as a bargaining chip to attract battery makers but rather as a financing tool, with the controlling shareholder backing the resource strategy with real capital. More critically, the change in fund usage from "working capital and debt repayment" to "mine investment and capacity building" indicates management's clear realization: in the lithium industry, ownership of mines confers both pricing power and survival rights. The substantial increase in fundraising size further underscores that management views the Muchuan project as a decisive factor for future viability, concentrating resources for its development.

According to the placement prospectus, the pricing benchmark date is the first day of the issuance period, with the final price determined through competitive bidding. The target investors include no more than 35 specific parties, with the controlling shareholder, Shengdun Group, committing to subscribe for cash worth no less than RMB 1 billion and no more than RMB 2 billion. Shengdun Group will not participate in the bidding process but will accept the outcome and subscribe at the same price as other investors. The project has two key allocations, with the core investment being the Muchuan lithium mine mining, processing, and tailings project. Located in Yajiang County, Ganzi Tibetan Autonomous Prefecture, Sichuan Province, the Muchuan deposit is the largest hard rock lithium mine discovered in Asia. According to the mining license issued by the Ministry of Natural Resources in October 2024, the mine has cumulative identified ore resources of approximately 61.095 million tons, with a lithium oxide resource of 989,600 tons and an average grade of 1.62%, far exceeding the average level of domestic hard rock lithium mines. The project has a designed annual processing capacity of 3 million tons of raw ore, and upon full operation, it is expected to produce high-quality spodumene concentrate equivalent to approximately 75,000 tons of lithium carbonate per year. The total project investment is RMB 4.762 billion, with RMB 3.71 billion to be drawn from the placement. Construction is expected to take four years, and at full capacity, the project is projected to generate annual revenue of RMB 3.198 billion and net profit of RMB 1.331 billion, with an internal rate of return of 23.57% and a payback period of 7.20 years (including construction).

Notably, Chengxin Lithium completed the acquisition of the remaining equity in Huirong Mining in February 2026 for RMB 1.26 billion, achieving 100% control of the Muchuan lithium mine. Once operational, the Muchuan mine will operate in tandem with the OINOC mine in western Sichuan, significantly boosting the company's resource self-sufficiency and marking a key transition from a pure "processing" model to an integrated "resources plus processing" structure. Since the start of 2026, Chengxin Lithium has entered a new phase of intensive capital expenditure, far exceeding historical levels. Beyond the Huirong stake acquisition, the company has increased capital in its wholly-owned subsidiary Shengdun Lithium and announced plans for a 75,000-ton-per-year lithium sulfate project in Zimbabwe (total investment of USD 244 million) and a similar project in Nigeria (USD 233 million). Combined visible capital expenditure now exceeds RMB 11.6 billion. This aggressive spending plan makes the current placement crucial; successful completion would significantly ease the company's financial strain. Additionally, the company's operating performance is improving, and the recovery in lithium prices provides further confidence. In H1 2026, revenue surged 355.94% year-on-year to RMB 7.358 billion, with net profit attributable to shareholders turning positive to RMB 1.012 billion, compared to a loss of RMB 841 million in the same period last year. After deducting non-recurring gains and losses, net profit reached RMB 1.332 billion. The company's lithium product gross margin rebounded to 31.75%. This substantial improvement is primarily attributed to the warming lithium salt market and the full ramping of the Shengto project in Indonesia, leading to higher sales volumes and prices.