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Hexagon in binding agreement with South Star Battery Metals - TechInvest Magazine Online

Written by Staff Writers | Dec 9, 2021 9:34:23 AM

Hexagon Energy Materials Limited (ASX: HXG) has signed a binding Earn-in and Option Agreement covering the 75% earn-in by South Star Battery Metals Corp. to Hexagon’s Ceylon Graphite Project located in Alabama, USA.

South Star will now progress work against the Earn-in milestones to acquire an interest of up to 75% of the Ceylon Graphite Project.

Hexagon currently owns 80% of the Ceylon Graphite Project, with the balance held by private owners including U.S. Critical Minerals LLC (USCM), as shareholders in the Project owner, Charge Minerals LLC (“Charge Minerals”).

The core elements of the Earn-in and Option Agreement which runs over three years are:-

A right for South Star to acquire an undivided 75% in the Project for C$750,000 in expenditure on the Project (including meeting eligible costs as set out in the Agreement) based on the following:

  1. Expenditures on the Property of at least C$250,000 by the first anniversary of the Agreement;
  2. Expenditures of at least C$250,000 by the second anniversary of the Agreement;
  3. Expenditures of at least C$250,000 by the third anniversary of the Agreement; and
  4. Preparation by South Star of a National Instrument 43-101 compliant Preliminary Economic Assessment in respect to the Project by the third anniversary of the Agreement.

After exercise of the Option a JV company will be formed where all parties will participate in further exploration and development of the Project and any operation of the Project, on a pro-rata basis in proportion to their percentage holdings.

For a period of six months following the 75% Earn-in option being exercised Hexagon and other deal participants individually have the right, but not the obligation, to sell their remaining 25% interest in the Project for an aggregate payment of C$250,000 in South Star shares.

Should South Star’s interest in the Project JV company increase to 90% or greater, South Star shall have the right, but not the obligation, to purchase the entire remaining interest not owned or under its control on a basis proportional to the Put Option.

South Star may withdraw from the Earn-in during the three year earn-in period, provided that South Star ensures that the Project is in good standing for a 12 month period post withdrawal. South Star remains responsible for rehabilitation work on the Project with respect to activities conducted by it during the earn-in.

South Star Battery Metals Corp. is a Canadian battery metals project developer and miner focused on the selective acquisition and development of near-term production projects in the Americas. South Star’s Santa Cruz Graphite Project, located in Southern Bahia, Brazil is the first of a series of industrial and battery metals projects, where commercial production planned for the end of 2022.

South Star will lodge all necessary documentation in respect of the agreement with TSX-V (Toronto SX Venture Exchange) within ten business days.

 “We are really looking forward to working with the team at South Star under this Agreement on the Ceylon Graphite project, including seeing how South Star creates value for our combined shareholder base in practical, on the ground terms,” Hexagon’s Managing Director, Merrill Gray, said.

He added this deal is part of Hexagon’s current process of refining its project portfolio so that the Company can focus on its Northern Territory Hydrogen initiative/Hydrogen business as well as the McIntosh Nickel- Copper-PGM Project in Western Australia. As part of this, Hexagon is actively working with parties towards value accretion strategies for its Gold and Base metal assets at Halls Creek in Western Australia.

https://hxgenergymaterials.com.au/