The development and commercialisation initiatives, which include a RapidSX Front-End Engineering Design (FEED) Study for a Commercial Demonstration Plant (CDP), will be funded from HXG’s existing cash.
In October 2019 the company executed a binding investment agreement whereby it secured an option to acquire a 49% interest in RapidSX for REEs.
RapidSX is an advanced, proprietary low-cost downstream REE separation technology developed and piloted by Innovation Metals Corp (IMC).
“Game-changer” for REE industry
HXG’s managing director Mike Rosenstreich said, “Given the strong support at our recent AGM for Hexagon’s expanded strategy and entry into REE processing, we are tremendously pleased to be able to start working with IMC and fund development of the Commercial Demonstration Plant forthwith.
“The RapidSX technology is a game-changer for the global REE processing industry, and a historic opportunity to diversify a global REE supply chain with greater participation from Western producers and manufacturers.”
Commercial plant plans
As part of the FEED Study HXG will fund an independent overview of the capital budget and schedule prepared by IMC, as well as some early extrapolations on capital costs for a full-scale commercial plant based on specific mixed REE chemical concentrate feedstock types.
With US$1.8 million in funding assistance from the US Department of Defense, IMC’s separation technology holds the potential to cost-effectively enable current and future REE producers to move downstream into REE separation.
This would potentially mitigate current concerns about the extreme concentration of the REE supply chain with greater participation by Western producers and manufacturers.
Incorporated joint venture
IMC and Hexagon have agreed to form American Innovation Metals (AIM), an incorporated joint venture, with IMC contributing the RapidSX technology IP and expertise for rare-earth separation while HXG will contribute commercial and marketing skills.
Hexagon has agreed to invest US$2 million into the construction of the RapidSX CDP and to pay US$4 million to IMC as deferred consideration, payable from Hexagon’s share of future AIM cash flows.
The RapidSX Commercial Demonstration Plant development timeline.
The phase-one funding contribution will be applied towards HXG’s US$2 million option obligation and will enable IMC, through AIM, to advance the requisite development work to ensure the RapidSX CDP timelines are achieved on time and on budget.
Concurrently the parties will work to protect the IP of this important and potentially disruptive REE technology.
AIM’s mandate is to commercialise the RapidSX technology for the separation and processing of REEs, and by doing so create a viable alternative to the Chinese monopoly over virtually the entire global REE supply chain.
Rosenstreich said, “With Front-End Engineering Design work commencing in early January 2020, we intend to have a RapidSX-based commercial demonstration plant fully operational in North America in Q4 2020, with a planned production capacity of between 60 and 80 tonnes per annum.
“Our focus is on the commercialisation of RapidSX to generate returns for our shareholders and to build a viable and sustainable energy-materials business.”
Other development and commercialisation initiatives are:
- Securing RapidSX Intellectual Property by finalising provisional patent applications on the RapidSX technology and related flow sheets, initially in the United States.
- The incorporation of American Innovation Metals (AIM) in the United States. AIM will serve as the incorporated joint venture vehicle for HXG and IMC to commercialise RapidSX.
AIM business case
The AIM business case is underpinned by:
- Substantial CAPEX and OPEX savings compared to traditional SX separation processes which are competitive with Chinese separation costs; savings which have already attracted significant end-user interest.
- A ‘capital-lite’ revenue model. RapidSX is planned to be licensed to users in exchange for variously structured licensing fees, but essentially leveraged to the capital cost savings, volumes and value of separated REE oxides (REOs).
- Explosive global demand forecasts for REEs over the next decade with the growth of REE permanent magnets used in renewable energy projects, electric vehicles (EVs) and a wide range of military and high-tech applications.
- Substantial market opportunity. Current primary REO market size of more than 183ktpa with a market value of US$3.4 billion; forecasted to grow 60% (to 293ktpa) in terms of market size and forecasted growth of more than 85% (to US$6.3B) in market value by 2025. Certain sectors are projected to have significantly higher growth rates, with the use of REEs for EV traction motors projected to grow by 350% between 2018 and 2025, demonstrating the considerable potential scale of the AIM business.