Shanghai (ZXZC)- In a recent press release, Farasis Energy unveiled a significant strategic shift in its investment plans. The company announced its decision to terminate the "High-Performance Power Lithium Battery Project" initially earmarked for its 2021 annual private placement initiative. The remaining funds, totaling 2.653 billion yuan, will be redirected toward two new projects: the "Ganzhou 30GWh New Energy Battery Project (Phase I)" and the "30GWh Power Battery Production Base Project (Phase I)".

Diving into specifics, the Ganzhou 30GWh New Energy Battery Project (Phase I) involves an total investment of 2.274 billion yuan. Approximately 1.326 billion yuan from the capital raised will be infused into this venture, which is expected to take 18 months to complete. Upon fruition, the project will exhibit an annual production capacity of 15GWh of ternary pouch batteries.

Photo credit: Farasis Energy

The other 30GWh Power Battery Production Base Project (Phase I), situated at the Sino-Singapore Guangzhou Knowledge City in the Guangzhou Economic and Technological Development Zone. This endeavor carries a total investment of 2.064 billion yuan, with 1.326 billion yuan sourced from the redirected funds. The project's estimated construction timeline is also 18 months, culminating in an annual production capacity of 15GWh of lithium iron phosphate pouch power batteries.

These strategic realignments come on the heels of Farasis Energy's private placement in November 2022. The company issued a total of 140 million shares at 23.7 yuan per share, securing a 3.318 billion yuan in investments from prominent stakeholders, including Guangzhou Industrial Investment and Capital Operation Holding Group, CIIHG, and Guangzhou Chong Hing.

Originally earmarked for the High-Performance Power Lithium Battery Project and technological reserves, the raised capital fell short of the initial projected investment. As a result, Farasis Energy opted to recalibrate its allocation, reducing the investment in the aforementioned project from the initial 3.92 billion yuan to 2.756 billion yuan.

Despite these strategic adjustments, progress on the original projects has been rather measured over the past year. Up until August 2nd of this year, a mere 110 million yuan has been utilized from the raised funds, reflecting a modest 4% progress in investment. Consequently, an unutilized balance of 2.653 billion yuan still remains within the confines of the project's account.

Farasis Energy has elaborated on the rationale behind these transformative changes, citing three pivotal factors.

Foremost, the evolution of its technology roadmap from ternary pouch power batteries to the cutting-edge Super Pouch Solution (SPS) signifies a leap in innovation. This SPS approach not only excels in cost-effectiveness but also demonstrates remarkable adaptability and material compatibility. The new projects will have production lines built on the new SPS technology.

Moreover, the company's strategic collaboration with local government platforms in Ganzhou and Guangzhou cities, adopting a contract manufacturing model, serves to alleviate financial pressures.

Finally, the geographical placement of production capacity in Ganzhou and Guangzhou is harmoniously aligned with the distribution of downstream customers. This strategic positioning fosters closer engagement with core clients, thereby enhancing service quality and responsiveness.