The Perth-based company said its original intention with the partnership was to increase its exposure to battery metals with a graphite asset.
The Perth-based company said its original intention with the partnership was to increase its exposure to battery metals by adding a graphite asset to its portfolio.
“However, MinRes has determined that any future investment in the McIntosh project will not meet its minimum investment return threshold set with regard to its other significant planned projects requiring development capital,” the company said in a statement.
The company, which has numerous iron ore assets, has exposure to battery metal lithium in Mount Marion, which is a 50/50 joint venture with Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460), and in Wodgina, which MinRes is developing together with top lithium producer Albemarle (NYSE:ALB) after signing a US$1.15 billion deal last year.
MinRes will write off its less than AU$5 million investment in McIntosh this financial year.
The joint venture, which was signed last year, could have seen MinRes earn a 51 percent interest in the project in return for funding all development costs to commercial production.
As a result of MinRes’ decision, Hexagon will regain a 100 percent interest in the McIntosh project, which is located in the Kimberley region of Western Australia.
The company kicked off a definitive feasibility study last year, with commercial production initially planned to start in 2021.
“(The company) plans to continue its evaluation work in preparation for the rebalancing of the graphite concentrate supply-demand situation forecast to occur in 3 to 4 years time,” said Hexagon Resources.
The company added that it will continue to pursue a downstream processing strategy, which it sees as more financially attractive in the immediate term.
The project currently has a resource of 21.3 million tonnes grading 4.5 percent total graphitic carbon for 964,000 contained tonnes.
On Wednesday (October 2), shares of MinRes were down 1.35 percent in Sydney at AU$13.16. Shares of Hexagon have been on a trading halt since September 23, when they closed at AU$0.059.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.