Hexagon Resources Ltd (ASX:HXG) shareholders have approved a joint venture arrangement with Mineral Resources Limited (ASX:MIN) to develop stage I of the McIntosh Graphite Project in Western Australia.
Hexagon and MinRes now intend to 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.
READ: Hexagon Resources agreement with Mineral Resources will result in development of graphite project
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.
Milestone in development
In an address to this week’s general meeting, Hexagon chairman Charles Whitfield said: “I see this transaction as the first milestone in the future development of Hexagon.
“This will see us leverage our core skills of understanding materials markets, being expert in the technical attributes of those markets, and identifying, securing and developing resources that can feed those markets.
“I am very proud of the team that we are putting together to execute this strategy and I think the transaction put in front of you is a great indication of the first fruit of their ability.”
The McIntosh project is now effectively funded through to full commercial development via a project-level joint venture.
Mining services agreement
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.
Hexagon believes the technical skills of MinRes, together with its Western Australian experience and financial capacity significantly de-risks the project.
Proposed demonstration plant
The company now plans to focus on the downstream development and stage II test work, comprising piloting and commercialisation of a purification circuit.
With the planned construction of a demonstration plant, Hexagon aims to verify to target-customers that its secondary processed and refined McIntosh graphite has cost advantages and technical enhancements over synthetic graphite.