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Explorer Hexagon Resources has locked in a joint venture deal which could see its McIntosh graphite project in Western Australia funded through to production within three years.

Hexagon (ASX:HXG) shares rallied as much as 14 per cent to an intra-day high of 16c on the news — which essentially de-risked an agreement signed between the explorer and lithium/iron ore miner MinRes (ASX:MIN) in March.

As per the original deal, Hexagon now gets a free ride through to Stage 1 production at McIntosh, with MinRes paying for everything to earn 51 per cent interest in the large project.

MinRes will also operate the 100,000 tonnes per annum graphite project once is up and running, which it says could happen in about two and a half years.

This agreement is still subject to the outcome of an ongoing feasibility study into the project, included a massive drilling program to upgrade the resources and generate core samples for metallurgical test work.

The drilling program was completed at the end of October, with assaying and metallurgical studies being completed over the remainder of the year.

The Hexagon (ASX:HXC) share price has ranged between 9.3c and 28c over the past year.
The Hexagon (ASX:HXG) share price has ranged between 9.3c and 28c over the past year.

Hexagon boss Mike Rosenstreich said MinRes had been very active on the ground at McIntosh.

“A major drilling program [was] recently completed — yielding a series of positive preliminary outcomes, –and approximately 17 tonnes of drill core samples [was] recovered,” he said.

“We look forward to the results of this program as soon as possible.”