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Hazer Group shares soar on potential commercial facility

Shares are trading up 24% intra-day, currently priced at $0.51.
two people shaking hands
Hazer shares have more than doubled since their December 2015 IPO

Hazer Group (ASX:HZR) has signed a non-binding heads of agreement with Mineral Resources Limited (ASX:MIN) to jointly develop a large-scale commercial synthetic graphite facility.

Mineral Resources is a leading and highly innovative full-service provider of mining infrastructure services in Australia.

The facility will initially target the production of at least 1,000 tonnes per annum of ultra-high purity graphite and be capable of modular expansion to a nominal 10,000 tonnes per annum.

Mineral Resources will fund the entire project across all required stages of scale-up and development, with Hazer providing technical assistance.

Hazer will obtain royalties from revenue generated by the sale of graphite produced.

Geoff Pocock, managing director, commented

“We are delighted to have furthered the relationship with Mineral Resources through this agreement.

“Mineral Resources has been a significant shareholder and supporter of Hazer since our IPO, and are the ideal partner for this next stage of commercialisation towards high value synthetic graphite products.

“Mineral Resources has an excellent track record in innovation and in delivering projects in accelerated timeframes. The company has substantial existing exposure to the battery industry to enable rapid market penetration.”

READ: What is the Hazer Process?

Further details

The focus of the collaboration initially will be on a pilot scale facility and the initial commissioning of the pilot plant is estimated to occur in the middle of 2018.

Once satisfied with the design and performance of the pilot plant, Mineral Resources then proposes to design and construct a commercial scale production facility capable of modular expansion.

This arrangement is expected to substantially accelerate the commercial deployment of the Hazer technology for both graphite and hydrogen production globally.

The ultra-high purity graphite to be produced will be suitable for high-end applications including batteries and electrodes.

How Hazer will generate revenue

Mineral Resources will pay Hazer a royalty based on net profit share per tonne of graphite produced, including any product produced by a party to whom Mineral Resources grants a sub-licence to use the Hazer technology.

The specific royalty rate is stepped, with lower royalties payable at lower graphite prices, and increasing as graphite prices increase.

This enables Hazer to benefit through additional exposure to increasing graphite prices.

Non-restrictive terms

The terms of the agreement also allow Hazer to continue pursuing current global hydrogen production opportunities, with Mineral Resources being granted primary off-take partner for any graphite that is produced as a by-product of the additional hydrogen production projects.

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