The board of directors of China Technology Industry Group Limited announced that on 22 September 2023 (after trading hours), Sanmenxia Baike New Energy Co. Ltd., an indirect wholly-owned subsidiary of the Company entered into a cooperation agreement with its project partner in relation to the construction and operation of different power plants in the PRC. The Cooperation Agreement serves as a term sheet for the strategic cooperation between the Project Partner and Sanmenxia Baike, and is not legally binding.

The Project Partner and Sanmenxia Baike shall negotiate and enter into a legally-binding long form agreement in due course. Under the Cooperation Agreement, the Group will construct, own and operate on idle land of the Project Partner (i) a distributed photovoltaic power plant with a potential capacity of 12MW (the "Photovoltaic Power Plant"), (ii) a wind power plant with a capacity of 200MW (the actual capacity being subject to regulatory approval) (the "Wind Power Plant"), and (iii) a user-side energy storage power plant with a capacity of 66.8MW/267.34MWh (the "Energy Storage Power Plant", and collectively with the Photovoltaic Power Plant and the Wind Power Plant, the "Power Plants"). The Power Plants will be a significant project for the Company - it is estimated that the total investment amount will be approximately RMB 2.061 billion.

After the construction of the Power Plants, the Group will supply to the Project Partner electricity generated from the Photovoltaic Power Plant and the Wind Power Plant, at an electricity fee payable by the Project Partner to the Group. The Energy Storage Power Plant will also be used to supply electricity to the Project Partner at an electricity fee - as the price of electricity fluctuates throughout a given day, the Group will purchase electricity from the electrical grid when the price of electricity is relatively low, store it in the Energy Storage Power Plant, and then sell the same electricity to the Project Partner when the price of electricity is relatively high. The Energy Storage Power Plant also has the ability to store unused and unsold electricity generated by the Photovoltaic Power Plant and Wind Power Plant.

The electricity fees payable by the Project Partner will be recognised as revenue for the Group, and under the Cooperation Agreement, the Group shall charge the Project Partner for electricity generated under the Power Plants at a rate lower than the market rate. It is estimated that the Power Plants will continue to generate revenue for the Group in the coming years. Under the Cooperation Agreement, the Group will continue to supply electricity to the Project Partner, and generate revenue, from the Power Plants for years to come.

As the Project Partner's principal business operations require a high electricity consumption day-to-day, and if a legally binding long-form agreement is entered into, the Company estimates that the Power Plants will generate a long-term steady stream of revenue. Furthermore, the Project Partner is a strategic customer of the Company, as its parent company (though its subsidiaries such as the Project Partner) holds many mines and smelters across the PRC, all with substantial energy needs and may become sources of revenue for the Group in future.