On 24 January, Huahong Technology announced that the company, based on the strategic planning and operation development need, planned to set up the "Ganzhou Huahong Rare Earth New Materials Co., Ltd. (tentative name; final name is subject to approval of the industrial and commercial authorities)" with a registered capital of RMB120 million (USD18.54 million) with China Southern Rare Earth Group Co., Ltd., Ganzhou Zeyu Management Consulting Co., Ltd. and Ganzhou Huayi Management Consulting Co., Ltd. together. In particular, Huahong Technology will contribute RMB54 million (USD8.34 million), accounting for 45% of the registered capital; China Southern Rare Earth Group Co., Ltd. will contribute RMB12 million (USD1.85 million), accounting for 10% of the registered capital; Ganzhou Zeyu Management Consulting Co., Ltd. will contribute RMB33.6 million (USD5.19 million), accounting for 28% of the registered capital; Ganzhou Huayi Management Consulting Co., Ltd. will contribute RMB20.4 million (USD3.15 million), accounting for 17% of the registered capital.

Ganzhou Zeyu Management Consulting Co., Ltd. and Ganzhou Huayi Management Consulting Co., Ltd. issued the "Power of Attorney" to Huahong Technology and decided to entrust Huahong Technology with all their voting rights corresponding to equities of Ganzhou Huahong Rare Earth New Materials Co., Ltd. After the establishment, Ganzhou Huahong Rare Earth New Materials Co., Ltd. will be a holding subsidiary of Huahong Technology.

According to Huahong Technology, the establishment of the holding subsidiary is the company's effort to construct the 60,000-ton-per-annum magnet waste comprehensive utilization project in Ganzhou Longnan Economic and Technological Development Zone with China Southern Rare Earth Group Co., Ltd. together. The holding subsidiary will achieve industrial cooperation with Huahong Technology's wholly-owned subsidiary Ji'an Xintai Technology Co., Ltd. in the field of rare earth resource comprehensive utilization and further safeguard magnet scrap supply of Ji'an Xintai Technology Co., Ltd., in favor of its production increase and production capacity expansion.