Hexagon Roadshow

Had the pleasure of attending a presentation given by Tony Cormack earlier this week & came away with a very positive feeling.

The turnaround in the company is truly amazing, given where it sat 12 months ago, with the delivery of the largest graphite resource in Australia coupled with a +99% TC concentrate from simple flotation at a recovery of +87%.

It can't be emphasised enough that this is an excellent result for the company and its back to basic strategy of proving the deposit & delivering a sustainable resource.

Despite what others might say in the graphite space, if you are going for the high end sales targets to battery manufacturers, it is the quality of the resource that is king. Size, grade, etc., are all very well, but if you cant separate the pure graphite from the deleterious materials, no matter how small a percentage that may be, it puts a stopper on this high end market target. That's not to say the material will not sell, just that it will not go into Li batteries which is the high end price everyone is aiming for.

There is lots of graphite in the world, but there are very few deposits that can be shown to give a +99% concentrate from simple flotation. Hexagon's Macintosh isn't the only one, but there are very few others.

Having shown that Hexagon has a sizable resource that can be delivered, Tony is now moving on to the next phases of marketing, finance & mine building. Samples of the diamond core have been sent to potential offtake partners & key companies round the world for them to test & validate. Discussions with potential strategic partners & financiers have commenced & are on-going. Positive relationships have been built with the traditional owners & native title negotiations are underway.

Tony presented very well & came across as a straight, down to earth, shooter. No bs, he tells it like it is & answers questions with straight direct replies without obfuscation.

Some other points that came across -

- Cash burn has been reigned in significantly with offices closed & Tony currently the only employee with other services/positions filled by contractors. There are also plans in place, as alluded to at the AGM, to replenish the cash balance position that does not include share placements.

- At this stage production is scheduled for late 2017 with the phase 1 plan to mine 1.2mtpa giving 50-60ktpa of high flake graphite to market.

- Given the metallurgical quality of the resource, Tony is assessing producing uncoated spherical graphite onsite at Macintosh. A plant to produce this material is available for $10-$20m & the process is not complex. Uncoated spherical graphite sells for $3-$3.5k per tonne.

All in all, I came away from the presentation with a confidence that the company has turned the corner.

I know what was said in the past & that previous management lost all credibility, but I do think that Hexagon does have a unique resource & in Tony Cormack, I think we have somebody who can actually deliver it. Look up his CV. He actually has built mines & brought them into production. And if he does it with Hexagon, given the metrics, he will make shareholders a lot of money.

View the presentation online, albeit print copy only, & read it yourself.

DYOR