Yellow River Cyclone: ​​Announcement of the implementation of the superhard material tool production line project

Stock code: 600172 Securities abbreviation: Yellow River Cyclone Announcement No.: Pro 2016-056
Announcement of Henan Huanghe Cyclone Co., Ltd. on the implementation of superhard material tool production line project The company and all members of the board of directors guarantee the truthfulness, accuracy and completeness of the information disclosure, and there are no false records, misleading statements or major omissions.

Important content tips
●Project Name: Superhard material tool production line project ● Total investment amount: 236.8 million yuan

I. Project Overview
In January 2015, the company issued 161,669,696 shares of non-public shares. After deducting brokerage underwriting commissions and other issuance expenses, the actual net raised funds were RMB 1,038,332,824.06. The above funds were mainly used for super Metallized single crystal and high quality micropowder industrialization projects on hard materials, superhard material tool production line projects and supplementary liquidity. According to Article 16 of the “Procedures for the Management of Raised Funds” (which was published on the website of the Shanghai Stock Exchange on March 29, 2014), the management of the company discussed the super-hard material tool production line project that did not reach the expected use status. Decided to continue implementing the project.
The total investment of the super-hard material tool production line project is 236.8 million yuan, including construction investment of 211.1 million yuan and initial working capital of 25.7 million yuan. The proposed investment in raised funds is RMB 236.8 million. The investment estimate is as follows:
â–  As of August 31, 2016, the funds raised for the project have been used as follows:
â–  The project has not yet been completed, and there are still engineering investment of RMB 26.47 million, equipment investment of RMB 157.11 million and liquidity of RMB 17.439 million.

Second, the project is not completed
The construction progress of the super-hard material tool production line project is slow, mainly due to the following reasons:

1) The actual time of the equipment is lower than expected, as follows:
A. The negotiation time of imported equipment is long to meet the production needs of the project, improve the technical performance of the products, and add high-end machine tools such as key sharpening equipment and testing equipment to the international advanced level equipment. There is basically no corresponding function in China. Equipment, these imported equipment are available in a limited number of manufacturers, mainly concentrated in the United Kingdom, Germany, Switzerland, the amount of equipment is large, the pricing power is at the manufacturer, the negotiation time is relatively long.
B. The long delivery time of imported equipment is that the relevant domestic departments have stricter examinations on high-precision imported equipment, and the review will take 3-6 months until the filing; the second is that the foreign suppliers will arrange the production after receiving the deposit; the third is the imported equipment. Shipped from abroad to domestic receipts for at least one and a half months to two months.
C. Long production period of imported equipment These high-end sharpening machine tools basically have no corresponding function in the domestic manufacturers. The accuracy, stability and reliability of the equipment are at the international first-class level. The manufacturers do not stock up, and the products are ordered according to the contract. Only when the production is arranged, there is usually no overtime work abroad. The production cycle of such equipment is generally more than half a year.

2) Problems in assembly, testing and operation of the equipment A. Some equipment purchased in the previous period are undergoing batch operation after installation and commissioning. The performance and problems found have been feedback to the manufacturer in time, and the subsequent equipment is optimized and improved in combination with the manufacturer. For example, the automatic loading and unloading device of the diamond tool grinder is limited by the loading method, which affects the mass production efficiency. The manufacturer has promised to improve the subsequent equipment hardware and help to transform the existing equipment. 2The automatic electric spark grinding machine manufacturer promises to develop a matching discharge power source for the company's technical requirements, improve the processing efficiency and sharpening quality, etc. Through the in-depth use of the equipment, the equipment capability is required, and the manufacturer's follow-up equipment is required. Targeted solutions.
B. New technology brings new updates to new devices. During the purchase of equipment, the new technology of laser sharpening has just appeared. The reputation and use of this new technology are still unknown. I only know that it has more advantages than the traditional grinding wheel. It is mainly reflected in: First, it can be processed including inner circle. In the complex shape; Second, there is a higher edge accuracy, the traditional grinding wheel sharpening at 0.01mm, and laser processing can reach 0.003mm, with higher processing quality; Third, laser non-contact processing can guarantee Better dimensional accuracy and processing efficiency. Although the new technology of laser sharpening is more accurate, more efficient and more versatile than conventional grinding, but since this equipment has just emerged, it is necessary to examine the application effect of new technology and other equipment during production and use. The matching situation requires a period of evaluation and affects the progress of the project.

3) Due to the slow construction period of the factory building, the imported equipment has strict requirements on the fixed facilities such as the working room, especially the vibration, temperature and humidity must meet the standards, resulting in a long decoration period.

Third, the future implementation plan
At present, the above-mentioned problems affecting the construction progress of the project have been basically solved. For the subsequent capital investment, the company has identified clear construction units and construction plans, as well as clear equipment procurement units and procurement plans, as follows:
â– â– The remaining liquidity investment is mainly for raw materials procurement and other expenses.

Fourth, the board of directors
The 7th Extraordinary Meeting of the 6th Board of Directors of the Company was held on November 24, 2016. With 9 votes in favor, 0 votes against, and 0 abstentions, the “Proposal on Continued Implementation of the Superhard Material Tool Production Line Project” was reviewed and approved. The project was a fundraising project in January 2015, and it was not in a predetermined state due to a series of reasons during the implementation process. Through the discussion at this meeting, it is decided to continue the implementation of the project based on the progress of the project and the rationality and necessity of continuing to implement the plan in the future.

V. Opinions of the Board of Supervisors
The 7th Extraordinary Meeting of the 6th Supervisory Committee of the Company was held on November 24, 2016. With 3 votes in favor, 0 votes against, and 0 abstentions, the “Proposal on Continued Implementation of the Superhard Material Tool Production Line Project” was reviewed and approved. After discussion by the Board of Supervisors, it was believed that the reason for the project not meeting the intended use status was true. The company's management plan for the latter part of the project was scientific and reasonable, and did not harm the interests of the company and minority shareholders. The Board of Supervisors agreed to continue the project.

VI. Documents for reference
Resolution of the Seventh Extraordinary Meeting of the Sixth Session of the Board of Directors of Henan Huanghe Cyclone Co., Ltd.
Henan Huanghe Cyclone Co., Ltd. Board of Directors November 25, 2016 Securities Code: 600172 Securities Short Name: Yellow River Cyclone Announcement Number: Pro 2016-057
Announcement on the Resolution of the 7th Extraordinary Meeting of the 6th Supervisory Committee of Henan Huanghe Cyclone Co., Ltd. The Supervisory Committee of the Company and all the Supervisors guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and the authenticity and accuracy of its contents. Sex and integrity assume individual and joint responsibility.
The Notice of the 7th Extraordinary Meeting of the 6th Supervisory Committee of Henan Huanghe Cyclone Co., Ltd. (hereinafter referred to as the “Company”) was sent by fax and e-mail on November 22, 2016, at 11 am on November 24, 2016. :00 is held on site. The meeting was presided over by Mr. Pang Wenlong, Chairman of the Board of Supervisors. The meeting should have 3 supervisors and 3 supervisors. The meeting was in compliance with the provisions of the "Company Law" and the "Articles of Association". After careful consideration by the supervisors at the meeting, the following proposals were passed:
I. Review and approve the Proposal on Continued Implementation of the Superhard Material Tool Production Line Project
The project was a fundraising project in January 2015, and it was not in a predetermined state due to a series of reasons during the implementation process. Through the discussion at this meeting, the Board of Supervisors considered that the management of the company strictly reviewed the project in accordance with the Company Law, the Articles of Association and the Measures for the Management of Raised Funds of Henan Huanghe Cyclone Co., Ltd. The progress of the project was evaluated, and the plan for the future implementation of the project was planned. The review procedure was legal and effective. The implementation of the project did not harm the interests of the company and the small and medium shareholders of the company, and was in line with the company's long-term development interests. The Board of Supervisors agreed to continue the implementation of the project. For details, please refer to the Announcement of Henan Huanghe Cyclone Co., Ltd. on the continued implementation of the superhard material tool production line project disclosed on the same day as the announcement.
Voting results: This proposal was approved by 3 votes, against 0 votes, and abstained from 0 votes.
Documents for reference: Resolution of the Seventh Extraordinary Meeting of the Sixth Supervisory Committee of Henan Huanghe Cyclone Co., Ltd. in 2016

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