PERTH (miningweekly.com) – The share price of graphite hopeful Hexagon Resources climbed by more than 5% on Thursday as the Australia-listed company announced plans to venture into downstream rare earths processing in the US.

Hexagon has signed a binding investment agreement for an option over a 49% interest in an advanced downstream rare-earth element separation technology developed by US-based Innovation Metals Corporation (IMC).

Under the terms of the agreement, Hexagon will invest $2-million into the construction of a commercial demonstration plant, and will pay IMC a further $4-million as a deferred consideration. This will be payable from Hexagon’s shares of future cash flows from the joint venture (JV) vehicle American Innovation Metals (AIM).

The commercial demonstration plant is expected to have a capacity of between 60 000 kg/y and 80 000 kg/y of rare earth oxides from a site in North America. The plant will take some six months to construct and commission, with operations planned to start by the third quarter of 2020.

The plant will make use of IMC’s proprietary RapidSX separation technology which is a proven, de-risked solvent extraction approach.

The commercial demonstration plant will be used to conduct staged scoping to feasibility level studies on the performance, capital and operating costs of a full-scale rare earth separation plant.

Hexagon said on Thursday that following its initial investment into AIM, the JV vehicle could potentially be self-funded through to commercialisation, with operating costs covered by client projects. However, AIM could also quality for US federal government grants and incentives.

Hexagon MD Mike Rosenstreich said that the rare-earth processing business would mesh well with Hexagon’s build-out of downstream processing of energy materials and was well covered by the US team that the company had already assembled.

“The lack of US-based downstream rare-earth element (REE) separation capacity represents a serious vulnerability to the US national security and the security of its allies, as REEs are critical for defence technologies and the US economic growth plans.

“REEs are also vital non-substitutable components of renewable energy supply chains, critical in meeting America’s future economic, energy and environmental goals. Without downstream capacity to separate and purify REEs, the US is unprepared for potential supply disruptions, price spikes and trade disagreements related to REEs. It is our intention to remedy this situation with the successful commercialistion of the RapidSX approach to REEs,” Rosenstreich said.

The transaction is subject to Hexagon shareholder approval, with a general meeting currently scheduled for November 22.