Today, on 17th May 2019, Hexagon Resources Limited (ASX: HXG) made an announcement about its positive scoping study for Advanced Graphite Processing (Graphite Purification and Processing Plant (GPPP)), which illustrates the opportunity for the company to capture significant margins from downstream of the graphite supply chain. This opportunity will help the company to manufacture high-specification graphite products.
The downstream scoping study examined the implementation plan, including several option scenarios regarding site location and purification technology. It involves: 1) The purchase, at prevailing market prices, of all the required high-quality graphite concentrate feedstocks and freight to the GPPP; 2) Sites in Geraldton, Western Australia or Chelan County, Washington State, USA; 3) Utilisation of one of the two thermal purification technologies to refine all the flake concentrate ahead of any processing; 4) Three product lines, which are expandable precursor lines, an Industrial Applications line and a Battery Materials line; 5) Production estimates for packaged products for customers, of whom 60% are estimated to be shipped to the USA and European market, and remaining 40% in Japanese, Korean and Chinese markets.
The development of the Graphite Purification and Processing Plant in successive stages are expected to commence in the first half of 2020. It comprises the construction of a qualification plant with a rated capacity of around 1K tonnes of products per year; scaling up to a commercial scale plant with a rated capacity of about 20K tonnes of products per year, and additional expansion to around 50K tonnes of products per year.
The product suite is planned to consist around 12 distinct, refined, milled and sometimes shaped graphite materials to be used to make expanded graphite, battery anode material (BAM), conductivity enhancement materials (CEM), ultra-fine powders and a precursor for synthetic diamonds, as well as an expanded graphite precursor.
The main participants to the Scoping Study completed by Hexagon for the GPPP were:
- GR Engineering Services Limited (ASX: GNG) â Included study management, engineering, design, cost estimation and compilation of the Scoping Study report document and input information.
- Hexagon â Site location studies, input testwork studies and with support from independent consultants completed a product marketing strategy.
- Optiro â A mining industry, consulting and advisory group reviewed this report to provide guidance to Hexagon on its compliance obligations with respect to the ASX Listing Rules and ASIC requirements.
The post-tax net present value (NPV) at 10% discount rate is estimated to be $0.88 to $1.20 billion for Geraldton (Australia), and $0.92 to $1.24 billion for Chelan County (USA).
On the stock information front, at the time of writing (on 17th May 2019, AEST 1:52 PM), the stock of Hexagon Resources was trading at $0.130, down 3.704% with the market capitalisation of ~$39.39 million. Today, it touched dayâs high at $0.135 and dayâs low at $0.125, with a daily volume of 341,980. Its 52 weeks high and low price stands at $0.245 and $0.120, with an average volume of 229,458 (yearly). Its absolute returns for the one year, three months and one month are -30.77%, 3.85%, and -3.57%, respectively.
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