Hexagon Resources: Key updates for the investors

On 25 January 2019, Mining and exploration company, Hexagon Resources Limited (ASX: HXG) published its quarterly activities and cash flow for the period ending 31 December 2018.

HXG accomplished 2 significant milestones in the December quarter as it moved towards its core objective of positive cash via commercialisation of its graphite assets:

 (1) Upstream, the McIntosh Joint Venture Project (MJV):Â

The drilling results included MinRes concluding an entire amount of diamond core and reverse circulation drilling. A wide, dense area of graphite was bisected at Mahi Mahi. The feasibility study is still under development phase, and an upgraded Mineral Resource evaluation to underpin mine growth work is anticipated for February 2019. The MJV reflected MineRes having the right to earn a 51% interest and HXG having 49% interest right to earn as per the agreement which was executed formally replacing the binding Heads of Agreement.

(2) Downstream, McIntosh flake graphite concentrate processing:

It included “Five nines” (99.999%) graphite purity attained for bigger, pilot scale sample. HXG presented itself at various investor and industry-specific conferences, meeting with prospective investors and graphite end users. The closing cash balance at the end of the quarter stood at $5.8 million with zero debt.

The MJV concluded a significant drilling program on 4 MJV prospects namely, Emperor, Wahoo, Mahi Mahi and Threadfin. Other work comprised of progressing discussions on Native Title agreement and strategizing of a wide metallurgical test work for the improvement and conclusion of the flow sheet processing. MinRes has been handling the program, and it is subject to a positive Feasibility Study if it would handle the project further.

On 18 December 2018, HXG announced that in continuation of purification test work on broader scale, 19.5 kg of graphite sample from the McIntosh flake graphite project in West Australia has generated ultra-high purity, up to “five nines” graphite results. It supported HXG’s downstream graphite plan aimed at less cost purification, towards high-end speciality markets.

Latest results included company being part of a focused program to establishing an electro-thermal fluidised bed purification furnace at pilot, qualification, and subsequently production scale and confirmed the amenability of McIntosh flake to undergo this planned purification process to achieve exceptionally high purities for industry-leading low operating costs.

The production target of 50ktpa had been calculated from Hexagon’s 49% (i.e. 50ktpa) joint venture equity allocation of 100ktpa bulk graphite concentrate production, which is derived from the production target presented in the Prefeasibility Study outcomes reported to ASX on 31 May 2017.

On 8 November 2018, HXG announced that the Mineral Resources Limited and Hexagon had executed the Joint Venture Agreement. The Confirmation was received on McIntosh Stage 1 feasibility and development funding being “de-risked” for Hexagon.

The stock of the company closed the trading session flat at A$0.130 (as at 15 February 2019) without any further changes. The company has a market capitalization of circa A$37.93 million and approximately 291.78 million shares outstanding. Its 52-week high was noted at A$0.280 and low at 0.120. During the last 6 months, the stock has given a negative return of 18.75%.


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