Graphite producer Hazer has surged 15 per cent in morning trade after a deal struck with $3.5 billion iron ore producer Mineral Resources.

Under the agreement, Mineral Resources (ASX:MIN) will pay for Hazer to design and build a full commercial scale synthetic graphite plant.

Shares in the company (ASX:HZR) were at 55c in morning trade, up 15.8 per cent – from a previous closing price of 47.5c.

The move will be a significant boost for Hazer’s technology that converts natural gas and similar feedstocks into hydrogen to produce high quality graphite, using iron ore as a process catalyst.

Initially, the two parties will collaborate on a pilot facility with capabilities to produce 1 tonne per annum (tpa) of high quality graphite suitable for high value applications such as lithium ion batteries.

HZR share price movements for the last six months. Source:
HZR share price movements for the last six months. Source:

They say commissioning of the plant is expected within eight months, and following its success they anticipate a scale up to construction of a 1,000 tpa producing facility.

“This is an excellent opportunity for Hazer to partner with an organisation with the balance sheet and capital reserves necessary for a project of this magnitude, and the  proven execution capability to accelerate the commercial deployment of our technology,” HZR managing director Geoff Pocock said.

And for Mineral Resources, the graphite produced will provide a key ingredient for their move to green and renewable energy initiatives.

Once it’s up and running, Hazer will be payed royalties based on revenue generated by the sale of high purity synthetic graphite calculated to achieve an agreed percentage of profits.

Last month, Hazer reported the successful use of its technology in its pre-pilot plant.

The company had $6.7 million left in the bank at the end of the last quarter, and expected to spend $1.25 million.

Today’s share price movements valued the company at $37.15 million.