Hexagon Resources signs graphite offtake deal with Chinese buyer

Hexagon Resources ASX HXG graphite offtake deal 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.

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