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Hazer Group has joined forces with its biggest shareholder Mineral Resources to develop a plant to produce synthetic graphite for lithium batteries.

Perth-based clean-tech junior Hazer (ASX:HZR) shot from 42.5c to 57.5c early on Tuesday, after its shares resumed trading for the first time since Thursday.

The stock cooled to 50c in afternoon trade.

Hazer has signed a non-binding deal with Mineral Resources (ASX:MIN) to develop a large-scale facility that will initially produce 1000 tonnes per year of ultra-high purity graphite.

The plant will eventually ramp up to 10,000 tonnes.

MinRes will fund the project. Hazer will provide technical assistance and earn royalties from revenue generated by the sale of graphite from the plant.

The pair will initially develop a 1-tonne test facility which is expected to be in production in the second half of 2018. MinRes will then focus on design and construction of a 1000-tonne commercial scale plant.

The deal allows Hazer to continue pursuing global hydrogen production opportunities.

Under the deal, MinRes will gain access to any graphite produced as a by-product of the hydrogen production process.

“This arrangement is expected to substantially accelerate the commercial deployment of the Hazer technology for both graphite and hydrogen production globally,” Hazer told investors.

Hazer Group, which listed on the ASX in 2015, was founded in 2010 to commercialise technology originally developed at the University of Western Australia.

The company developed the Hazer Process, which uses natural gas and unprocessed iron ore to create low-cost, low-emission “clean” hydrogen, considered a key fuel in the transition to low carbon economy.

In addition to the hydrogen product, Hazer produces synthetic graphite used in lithium ion batteries to power electric vehicles.

MinRes holds a 14.2 per cent stake in Hazer which has a market cap of around $34 million.