Hexagon Resources and Mineral Resources (MinRes) have signed Joint Venture Agreement (JVA) that will cover the development of McIntosh Graphite Project (Project) in northern Western Australia.
The joint venture, which is managed and funded by MinRes, has been operating since shareholders of Hexagon approved the transaction in May this year.
As per the joint venture agreement, Hexagon and MinRes will form an unincorporated joint venture following confirmation that MinRes has completed its initial farm-in expenditure of $300,000, with Hexagon and MinRes will having 49% and 51% participating stakes, respectively.
Furthermore, MinRes will be solely responsible for undertaking feasibility studies within 18 months (before 14 October next year).
MinRes will commence the activities for development of the project within 24 months (before 14 April 2020) and complete the project development activities and achieve commercial production of graphite concentrate within 36 months or before 14 April 2021.
It was also agreed that MinRes or its subsidiaries will also provide all the mining, processing and logistical services for the project.
The joint venture will engage MinRes as mining services contractor under a life of mine, mining services agreement pursuant to which MinRes will fund and use best endeavours to achieve production of the first two shipments or the first 16,667 tonnes (two months equivalent at a run rate of 100ktpa) of flake graphite concentrate from the McIntosh Project within 36 months of approval from shareholders of Hexagon.
Within six months of achieving Project Readiness, MinRes must mobilize to site and start a level of activities which is consistent with an intention to develop the McIntosh Project to Commercial Production. It must also obtain all the necessary approvals for mining and construction to commence within 36 months of Hexagon shareholder approval.
Hexagon managing director Mike Rosenstreich said: “The signing of this agreement effectively de-risks the project for Hexagon’s shareholders, having a company with the financial capacity and operational skills such as MinRes involved.
“To date MinRes has certainly been very active on the ground, with a major drilling program recently completed, yielding a series of positive preliminary outcomes, and approximately 17 tonnes of drill core samples recovered. We look forward to the results of this program as soon as possible.”