Hexagon Resources Limited (ASX:HXG)
(“
Hexagon” or the “
Company”) is
pleased to announce it has executed a binding Investment Agreement
(“
BIA”) whereby Hexagon has an Option to acquire a
49% interest in an advanced, downstream rare-earth elements
(“
REE” or “
REEs”) separation
technology from
Innovation Metals Corp.
(“
IMC”). IMC’s proprietary
RapidSX™ REE separation technology holds the
potential to enable current and future REE producers outside of
China to serve US, European, Japanese and Korean markets,
mitigating the current extreme concentration of REE supply and
separation capability in China. The rare-earth processing business
meshes well with Hexagon’s build-out of downstream processing of
energy materials and is well covered by the US team that the
Company has already assembled.
IMC and Hexagon’s wholly owned US subsidiary, Energy Materials
of America LLC are to form an incorporated joint venture,
American Innovation Metals Inc.
(“AIM”) with 49% and 51% ownership respectively,
as illustrated in Figure 1 below. IMC will contribute the RapidSX
technology IP for REE separation and Hexagon will invest US$2
million into the construction of a Commercial Demonstration Plant
(“CDP”) and pay US$4 million to IMC as Deferred
Consideration, payable from Hexagon’s share of future AIM cash
flows. The exercise of the BIA’s Option is conditional on Hexagon
shareholder approval, to be sought at Hexagon’s AGM in Perth,
Western Australia on November 22, 2019.
HIGHLIGHTS
- The RapidSX technology is a proven, de-risked REE separation
technology, based on solvent extraction (“SX”),
ready to be commercialized, representing a very exciting
energy-materials business opportunity to Hexagon.
- The United States Department of Defense
(“DoD”) contributed US$1.8 million to an IMC
program which led to the development of the RapidSX approach, a
unique process for the production of commercial-grade separated
REE-oxide (“REO”) materials at pilot scale.
- Competitive advantages of RapidSX technology for REEs include:
- Low capital costs: due to
significantly reduced size and number of separation stages and
resulting physical plant footprint, compared to conventional SX
approaches;
- Low operating costs: due to
significantly reduced separation times (days compared to weeks),
reduced reagent and power consumption, reduced manpower
requirements and reduced in-process metal inventories;
- All equipment and construction materials are readily
commercially available; and
- The RapidSX technology is modular and
scalable, capable of entering into a grossly underserved
US market without the risks of oversupply.
- The CDP is planned to have a production capacity of 60,000 to
80,000 kg of REOs per year and construction is planned for
completion at a site in North America in Q3 2020.
- Commercialization base case is to licence the RapidSX
technology for fixed and revenue-based fee structures. Preceding
those agreements, clients will utilize the CDP to test their
rare-earth concentrates on a fees-for-service basis.
- Following Hexagon’s initial investment, AIM could potentially
be self-funding through to commercialization; however, AIM may also
qualify for US federal government grants and incentives.
- AIM paves the way for construction and operation of an
independent, full-scale RapidSX-based rare-earth separation plant
in the USA (presently, there is no REE separation capacity in the
US).
- The RapidSX CDP is expected to take approximately 6 to 9 months
to construct and commission, and operations are anticipated to
commence in Q3 of 2020.
Figure 1: The Hexagon-IMC Joint-Venture
Structure is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/0f1ee544-77b9-4cd8-8a25-035275a93bb1
Hexagon believes that this JV will complement its existing focus
on graphite, and in particularly its activities in the downstream
graphite-processing sector, which are also an integral component to
the energy-materials industry.
Hexagon’s Managing Director Mike Rosenstreich said forming the
JV with IMC was part of Hexagon’s broader US-based energy-materials
business strategy.
“Through our graphite marketing discussions, we formed a greater
understanding of the strong domestic drivers that are going to
underpin the energy-materials business as we see the world embrace
electric vehicles and other technological advances in energy,” he
said.
“There are no US domestic sources of key energy materials such
as natural graphite and separated REEs – where China accounts for
85% of global production. There is a REE supply crisis, so we see
this as an ideal opportunity to ultimately develop a ‘Made-in-USA’
brand that can meet growing US and global demand.”
“Hexagon is excited to be working with the IMC team to
commercialize the RapidSX technology for REE separation,” commented
Mr. Rosenstreich. “The lack of US-based REE separation capacity
presents a serious vulnerability to US national and economic
security and the security of its allies, as REEs are critical for
defense technologies, electric vehicles and US economic growth
plans. Without downstream capacity to separate and purify REEs, the
USA and its allies are vulnerable to potential supply disruptions,
price spikes and trade disagreements related to REEs. It is our
intention to remedy this situation with the successful
commercialization of the RapidSX approach to REEs.”
IMC developed the RapidSX separation technology with the
assistance of US$1.8 million in funding from the US DoD, resulting
in the production of commercial-grade separated REOs at the pilot
scale. The technology combines the time-proven chemistry of SX with
a new column-based platform, which significantly reduces time to
completion and plant footprint, as well as lowering capital and
operating costs. It has also been successfully applied to the
separation and purification of other metals in solution, such as
Ni, Co and Fe in leach solutions produced from Ni laterite ores, as
well as Li from Li brines.
Figure 2: REE – REO Generalized Supply
Chain is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/00d50da2-7a3c-4e2f-90bf-5981964a7c8c
“IMC has long recognized the need for cost-effective REE
separation and purification capabilities in the USA and beyond,”
commented Dr. Gareth Hatch, Chairman and CEO of IMC. “In addition
to ongoing US-China trade tensions, in recent years the authorities
in China have been more strictly enforcing environmental protection
and pollution-control measures, leading to the closure of
non-conforming industrial plants and facilities. The REE industry
is no exception, and these steps have led to a gradual reduction in
REE production capacity, tightening supply. The joint venture with
Hexagon represents a unique opportunity to support the much-needed
diversification of the REE supply chain, and we look forward to
working with the Hexagon team to realize our shared
objectives.”
The CDP will be used to conduct staged scoping- to
feasibility-level studies on the performance, capital and operating
costs of a full-scale, RapidSX-based REE separation plant.
Initial commercialization by AIM will focus on licencing of the
RapidSX technology to mixed REE chemical-concentrate producers for
fixed and revenue-based fee structures. Ahead of these licensing
agreements, clients will have the opportunity to utilize the CDP to
test the separation of their mixed REE chemical concentrates, while
covering the plant operating costs.
Following Hexagon’s initial investment, AIM could potentially be
self-funding through to commercialization. It may also attract
government grants and incentives, particularly from the USA, with
respect to the future construction of a US-based independent,
full-scale RapidSX-based REE separation plant, to be owned and
operated by AIM.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/8229dbd0-93c1-41fd-b29f-100b524cc2d7
Hexagon’s RapidSX™ REE
Presentation: Next-Generation Energy Materials Start
Here can be accessed through the following link:
https://g-w.sharefile.com/share/view/s9b2e37f7b1448b08
Hexagon’s corresponding October 10, 2019 ASX announcement can
accessed through the following link:
https://hexagonresources.com/wp-content/uploads/2019/10/20191010-HXG-Enters-US-Rare-Earths-Downstream-Processing-Industry_1983006.pdf
About Hexagon Resources LimitedHexagon
Resources Limited is listed on the Australian Securities Exchange
(“ASX”) under the ticker code “HXG”. The Company holds a 100%
interest in the McIntosh Graphite Project in Western Australia and
an 80% interest in the Ceylon Graphite Project in Alabama, USA.
With a current focus on the downstream processing of graphite and
other energy materials, Hexagon has attained formidable technical
knowledge based on test work of its McIntosh project flake-graphite
material, which is applicable and highly valuable for a range of
specialty-material applications. The Company’s focus is on creating
sustained shareholder value by maximizing near-term growth
opportunities to commercialize that downstream business in the USA,
where it has forged strong technical, commercial and investor
relationships.
Learn more at www.hexagonresources.com
About Innovation Metals Corp.Innovation Metals
Corp. is a private Canadian company and developer of the
proprietary RapidSX™ process for the low-cost separation and
purification of rare-earth elements (REEs), Ni, Co, Li, and other
technology metals, via an accelerated form of SX. IMC is
commercializing this approach for a number of metals, to help
enable mining and metal-recycling companies to compete in today’s
global marketplace.
Learn more at www.innovationmetals.com
Forward-Looking StatementsThis news release
contains projections and statements that may constitute
"forward-looking statements" within the meaning of applicable
United States, Canadian and other laws. Forward-looking statements
in this release may include, among others, statements regarding the
future plans, costs, objectives, or performance of Hexagon
Resources Limited or the assumptions underlying any of the
foregoing. In this news release, words such as "may", "could",
"would", "will", "likely", "believe", "expect", "anticipate",
"intend", "plan", “goal”, "estimate," and similar words, and the
negative forms thereof, are used to identify forward-looking
statements. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that are beyond the
control of Hexagon Resources Limited, and which may cause the
actual results, level of activity, performance or achievements of
Hexagon Resources Limited to be materially different from those
expressed or implied by such forward-looking statements. Such risks
and uncertainties could cause actual results, plans and objectives
of Hexagon Resources Limited to differ materially from those
expressed in the forward-looking information. Hexagon Resources
Limited can offer no assurance that its plans will be completed.
These and all subsequent written and oral forward-looking
information are based on estimates and opinions of Hexagon
Resources Limited management on the dates they are made and
expressly qualified in their entirety by this notice. Except as
required by law, Hexagon Resources Limited assumes no obligation to
update forward-looking information should circumstances or the
estimates or opinions of Hexagon Resources Limited management
change.
Contact
Hexagon Resources Limited Mike Rosenstreich CEO
and Managing Directortelephone: +1 416 265 4886email:
hexagon@g-w.ca
Media and Investor Relations Contact:G&W
Communications Inc. telephone: +1 416 265 4886email:
hxg@g-w.ca
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