Hexagon Resources Ltd (ASX:HXG) has signed an agreement with Mineral Resources Limited (ASX:MIN) leading to development of stage I of the McIntosh Graphite Project in Western Australia.
Under the heads of agreement, Hexagon and MinRes will establish an unincorporated joint venture with Hexagon holding a 49% participating interest.
MinRes will earn 51% by undertaking all feasibility studies within 18 months leading to a decision to mine within 24 months.
Three-year target to begin production
A three-year target has been set for MinRes to complete development activities and begin commercial production of graphite concentrate from the project in the East Kimberley region.
Hexagon was up 42% intra-day to 27 cents.
MinRes will build, own and operate the entire pit to customer mining, processing and logistics supply chain under a life of mine, mining services agreement.
A 50:50-owned special purpose company will act as the marketing agent for all stage I graphite concentrate products.
“Credible partner to work with”
Hexagon managing director Michael Rosenstreich said: “Mineral Resources is a very credible partner to work with us to bring the stage I graphite project into production.
“Their technical skills, Western Australian experience and financial capacity significantly de-risks the project and provides certainty to Hexagon and our investors.
“Subject to a favourable feasibility study, Hexagon now has a clear line of sight toward product sales and cash flow, which will be funded by MinRes to commercial production under its proven build own operate model.
“In terms of future business growth, this enables the Hexagon team to focus on the downstream, stage II processing options and new project opportunities.”