Graphite play Hexagon doesn’t have any product yet, but today signed an agreement to ship 30 per cent of it to China as soon as it does.

Hexagon (ASX:HXG) is working on the first stage of its flake graphite facility in WA as demand rises among lithium ion battery makers for high purity graphite.

As part of the agreement with China National Building Materials — General Technology Co (CNBM-GT) — the two will negotiate project finance, pre-payment and debt facilities to speed up factory construction.

News of the agreement jollied investors, sending the share price up 13 per cent before lunch to 25c, and at one point to a record high of 26.5c.

The shares closed up 7 per cent at 23c on Friday.

Hexagon Resources (HXG) share price over the past month.
Hexagon Resources (HXG) share price over the past month.

Earlier this year the company announced results from tests which confirmed that its proprietary technology worked as a way to concentrate flake graphite to a ultra-high purity product in a simple and low-cost process.

Hexagon said it was achieving refined concentrate grades as high as 99.9998 per cent carbon by using their thermal purification technique.

Purity is a core price driver for graphite materials and Hexagon is confident it will exceed their recently updated price of $US2,200 per tonne of concentrate.

There is a considerable price premium for ultra-pure material because of its use in the nuclear industry, as a way to make synthetic diamonds for specific uses, and in advanced electronics and batteries.

“Recent test work reports have stimulated a considerable increasing interest in the McIntosh project from off-takers, financiers and investors,” managing director Mike Rosenstreich told the market.

“This MoU is an important step towards a binding contract because each party will invest significant time and resources to achieve a mutually beneficial long-term off-take agreement.”

CNBM is one of the world’s largest building material companies and has recently further diversified into advanced materials, including downstream graphite processing industries through CNBM-GT.