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Hexagon Energy Materials rare-earths investment strategy endorsed by IMC takeover

The valuation of the takeover represents a significant uplift to the implied valuation of Hexagon’s US$2.0 million investment to earn 49% of IMC’s RapidSX.

Hexagon Energy Materials Ltd - Hexagon Energy Materials rare-earths investment strategy endorsed by IMC takeover
The takeover provides an opportunity to fast track the RapidSX rare earth processing technology

Hexagon Energy Materials Limited (ASX:HXG) is set to benefit from its option to acquire 49% of Innovation Metals Corp’s (IMC) RapidSX rare earth element (REE) processing technology.

Ucore Rare Metals Inc. (CVE:UCU) (OTCMKTS:UURAF) reported that on April 25 2020, it signed a purchase agreement to acquire 100% of IMC at a valuation of C$5.8 million (A$6.4 million) payable in Ucore shares.

IMC’s core asset is RapidSX, a unique accelerated form of solvent extraction which it developed for separation of REE, assisted by US government funding of about US$1.8 million.

Hexagon and IMC have a binding investment agreement where Hexagon may earn a 49% interest in RapidSX for REE separation via a US$2 million cash payment before October 10, 2020 and US$4 million in deferred payments with recourse only to cash flows from the RapidSX joint venture – to be named American Innovation Metals (AIM).

Importantly, this takeover transaction preserves and recognises Hexagon’s investment agreement with IMC.

Opportunity to accelerate development activities

Hexagon managing director Mike Rosenstreich said: “The valuation that this takeover is based upon represents a significant uplift to the implied valuation of Hexagon’s US$2.0 million investment to earn 49% of RapidSX for rare earth separation, thus endorsing the investment opportunity that we saw last year.

“Ucore has been interested in becoming more commercially involved in RapidSX following on for some months as discussion progressed around from the Technical Services Agreement announced in February.

“We recognise the opportunity this transaction offers to accelerate development activities of the Commercial Demonstration Plant through these tough COVID-19 times and to position the AIM joint venture on an accelerated commercialisation path as a new normal operating environment emerges.”

Immediate funding for RapidSX

The Ucore acquisition provides the opportunity for AIM to fast track the commercialisation of RapidSX in the US through Ucore’s planned ‘Strategic Metals Complex’ also being utilised for commercially available, U.S. allied-sourced, mixed REE concentrate sources.

As part of the Ucore-IMC purchase agreement, Ucore states that it will lend IMC C$500,000 for the immediate continued development of RapidSX.

Meanwhile, Hexagon working with REE process expert Gavin Beer will progress assessment of the commercialisation opportunities of RapidSX for REE, whilst also continuing its discussions on securing the required funding.

Quick facts: Hexagon Energy Materials Ltd

Price: 0.055 AUD

ASX:HXG
Market: ASX
Market Cap: $16.08 m
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Hexagon Energy Materials: Takeover of partner is 'strong signal of support'...

Hexagon Energy Materials Limited (ASX:HXG) managing director Mike Rosenstreich discusses with Proactive's Andrew Scott the takeover of its partner IMC and how they're set to benefit from the option to acquire 49% of their RapidSX technology. RapidSX is a unique accelerated form of solvent...

on 1/5/20

2 min read