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Hexagon Resources intends moving to feasibility study for graphite processing plant

A scoping study has highlighted the opportunity to create a revenue stream by value-adding to the downstream graphite supply chain.
Core sample from McIntosh
Graphite mineralisation in a core sample from the McIntosh project

Hexagon Resources Ltd (ASX:HXG) aims to proceed to a feasibility study for its proposal to develop a standalone graphite purification and processing plant (GPPP).

This follows a positive scoping study which generated strong financial results highlighting the opportunity to deliver impressive margins by value-adding in the downstream graphite supply chain.

The GPPP would manufacture high-specification graphite products, such as materials to be used in battery and technical/industrial applications.

Strong financial results

Financial results include a post-tax Net Present Value (NPV) ranging from $594 million to $958 million and a post-tax Internal Rate of Return (IRR) ranging from 32% to 49%.

These figures are calculated on an unleveraged basis and are dependent on the site selected.

A snapshot of the main outcomes of the GPPP scoping study.

Two site options

The study considered various options for development of the plant along with sites at Geraldton in Western Australia and Chelan County in Washington, USA.

As a result, the preferred option based on post-tax NPV and IRR is Chelan County, which also had lower electricity costs and is closer to premium markets in the USA and Europe.

READ: Hexagon Resources tests show potential for standalone downstream graphite processing

Potential development of the GPPP is separate to Hexagon’s interest in the McIntosh Flake Graphite Project in northern WA at which Mineral Resources Limited (ASX:MIN) has earned a 51% equity.

MIN is required to fund and undertake all activities to bring this project into commercial production, subject to a positive feasibility study, which is underway.

The GPPP scoping study considered McIntosh as a potential source of flake concentrates and Hexagon will continue to evaluate the Geraldton site based on proximity to the project and other sources.

READ: Hexagon Resources updates McIntosh flake graphite resource; 81% classified as indicated

There are three areas in which the GPPP would produce high-specification graphite products:

Expandable line – products derived from larger sized purified flake material and sold as an expandable precursor as a higher purity material. These would be suitable for high-tech foils, gaskets and seals for use in the nuclear industry or fuel cell applications.

Industrial line – products derived from mid-sized purified flake into four product segments: synthetic diamond precursor; conductivity enhancement materials for batteries and electrodes; ultra-fine grain material for specialised coatings; and mould release agent for foundries.

Battery materials – derived from mainly finer-sized purified flake as well as ‘undersize’ from the above lines consisting mainly of battery anode material comprising standard uncoated spherical graphite for lithium-ion battery anodes and some speciality spherical and ultra-fine materials for industrial uses.

Focusing on these areas would enable Hexagon to produce a dozen products for a variety of markets.

The GPPP project is designed in three phases to gain market acceptance for the various products by customers:

  • Phase I: Qualification – producing up to 1,000 tonnes per annum to send to customers;
  • Phase II: First commercial phase with annual production at 20,000 tonnes; and
  • Phase III: Second commercial stage, annual production increased to 49,000 tonnes. 

Based on the scoping study outcomes, Hexagon plans to move to a feasibility study to enable an initial financial investment decision on the development of phase I in late 2019. 

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