Hexagon Resources signs graphite offtake deal with Chinese buyer

Australian graphite exploration makes further inroads into world markets with Hexagon Resources (ASX: HXG) signing a Memorandum of Understanding (MoU) with China National Building Materials – General Technology Co. (CNMM-GT), for the sale of at least 30% of its graphite production from the McIntosh Project in Western Australia.

Graphite has become a highly sought-after commodity after it began to be used in lithium-ion batteries and since the invention of its state-of-the-art derivate: graphene. Both graphite and graphene have the capability to reshape much of modern society through how it is used in devices, cars and large construction projects.

Hexagon has initiated a concerted plan to obtain a high-grade graphite in WA in order to supply the growing market with today’s offtake deal symbolising an important milestone for Hexagon. Furthermore, Hexagon and CNMM-GT have agreed to negotiate project finance, pre-payment and other debt facilities to expedite project construction. Hexagon says that this is the first step for the company to secure further off-take agreements.

This follows on from Hexagon’s completed Pre-Feasibility Study completed last year which improved Hexagon’s product specification and has opened the possibility for Hexagon to exceed its target price of US$2,200 per tonne of concentrate.

“Hexagon’s plans are for this to be the first of a series of collaborative agreements with a geographically widespread and diverse group of end-users with a significant presence in the graphite market,” said Mike Rosenstreich, Managing Director at Hexagon.

According to Hexagon, recent test-work results have peaked “considerable increasing interest in the McIntosh project from off-takers, financiers and investors,” with the company citing sovereign risk issues, heightened concerns about security and reliability of high-grade supply, as the reasons underpinning higher demand.

Just last month, Hexagon published a market update indicating McIntosh could produce graphite with quality as high as 99.999% total graphitic content after processing. Hexagon is adamant it can produce high-grade graphite and develop concentrates up to “ultra-high purity through a simple, low-cost process.”

“This MoU is an important step towards a binding contract because each party will invest significant time and resources to achieve a mutually beneficial long-term off-take agreement,” said Rosenstreich.