Deep Source Holdings Limited Announces Acquisition of Lithium Project and Major Business Expansion

Key Highlights

• Acquisition of 100% of Tortuga de Oro S.A. in Argentina for US\$70 million (approx. HK\$546 million).
• Strategic move into the lithium sector with plans to develop an integrated lithium value chain, spanning mining to processing and distribution.
• Major business expansion in lithium resources in Argentina, Tibet, Australia, and Malaysia.
• Potential for significant new revenue streams and improved supply chain control for the Group.
• Not a notifiable transaction under HKEX Listing Rules, but announcement made voluntarily due to the strategic importance.
• Shareholders should note the transaction is subject to several conditions and may not proceed.

Details of the Share Purchase Agreement

• Date of Agreement: 24 April 2026
• Buyer: Deep Source Holdings Limited
• Seller: Tibet Summit Resources Hongkong Limited (87.5% owned by a Shanghai-listed company, stock code: 600338; classified as an Independent Third Party)
• Target: 100% of the issued share capital in Tortuga de Oro S.A. (Argentina), focused on lithium resource exploration and development
• Total Consideration: US\$70,000,000, paid in tranches:
  • US\$10,000,000: within one business day of signing
  • US\$30,000,000: within five business days of initial payment
  • US\$30,000,000: milestone payments (US\$10M each) upon cumulative production of lithium carbonate equivalent of 30,000t, 60,000t, and 90,000t
• Completion Process:
  • Update of register of members within 40 business days of initial payment
  • Share transfer, board control, and delivery of documents within 60 business days
  • Conditions include no material adverse change, true warranties, and absence of legal proceedings restricting the deal
• Post-Completion Protection: If a material adverse circumstance is discovered within 6 months of completion, Deep Source can rescind the deal, require a full refund and an additional US\$20 million termination fee, and return the shares.
• Funding: Entirely from internal resources.

Financial Information of the Target Company (Tortuga de Oro S.A.)

• Revenue: Nil for years ended 31 Dec 2024 and 2025
• Loss Before Tax: RMB 32.1M (2024), RMB 21.7M (2025)
• Loss After Tax: RMB 32.3M (2024), RMB 21.7M (2025)
• Net Assets (Unaudited, as of 31 Mar 2026): RMB 103.7M
• Primary Asset: Alizaro Salt Lake lithium project in Argentina

Strategic Rationale and Business Development

• Integrated Lithium Value Chain: Deep Source plans to develop operations spanning spodumene ore, spodumene concentrate, and lithium carbonate, including distribution, beneficiation, and toll processing.
• Upstream Supply Security: Equity investments in lithium salt lake and spodumene resources in Tibet, Australia, and Argentina.
• Malaysian Processing Hub: Plan to develop a base to convert spodumene ore into concentrate and build lithium carbonate production capacity.
• Offtake Arrangement with Mamicuo Salt Lake (Tibet): Signed in September 2025 for 200,000 tons of lithium carbonate over 10 years; production expected to commence in July 2026.
• Further Expansion: Ongoing discussions for additional lithium carbonate sourcing in Tibet and China, plant acquisitions in China, and spodumene sourcing in Australia.

Potential Share Price-Sensitive Information

• Major Strategic Shift: The move into lithium, a high-growth sector, could materially transform the Group’s revenue base and growth prospects.
• Securing Upstream Supply: Direct ownership of lithium resources reduces supply risk for downstream operations, potentially improving margins and profitability.
• Contingent Risks: The transaction is still subject to conditions (such as no material adverse change, completion of due diligence, regulatory approvals), and may not proceed. There is also a post-completion clawback/penalty mechanism if issues are discovered within six months.
• Loss-Making Target: The Target Company is currently loss-making and pre-revenue, with ongoing development risk for the Argentinian lithium project.
• Long-Term Growth Potential: The integrated lithium strategy, if successful, could provide significant new income sources, supply chain synergies, and higher returns to shareholders.

Board and Management

• Directors:
  • Executive: Jiang Jiang, Wu Lei
  • Non-Executive: Ding Lin, Kang Jian
  • Independent Non-Executive: Liu Song, Chan Lai Ping, Wong Hok Bun Mario

Important Shareholder Advisory

Shareholders and potential investors should be aware: The acquisition is subject to several conditions and may not proceed. There are material business and execution risks, especially given the current loss-making status of the Target Company and the developmental nature of its lithium project. Investors are strongly advised to exercise caution when dealing in the securities of Deep Source Holdings Limited.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. The information is based on publicly available documents as of 27 April 2026 and may be subject to change.

View DEEP SOURCE Historical chart here