Hexagon Resources : Expandable Large Flake Graphite at McIntosh 23 November 2017

Hexagon Resources Ltd (ASX: HXG) is delighted to provide a further update on the latest results from its current material test work program and the impact on its product development strategy for its flagship, Western Australian, McIntosh Graphite Project.

The testing has returned strong results, highlighting the flake size and the potential of the McIntosh concentrate as a viable product in the expandable graphite market.

Highlights include:

1. 220% Expansion Factor for +60 Mesh (+250 micron) sized flake achieved in first-ever test work for McIntosh flake graphite resource; this is considered to be "well above average" and a highly marketable attribute.

   Figure 1: Example of expansion calculation; weight of material (left) and volume (right)

2. Flake sizing analysis reported recently indicated more than 78% of concentrate flake was larger than 60 Mesh (250 microns) (refer ASX Report 7 November 2017).

3. Synthesis of expandable McIntosh flake graphite did not require the use of exotic chemicals or complicated treatments; only standard reagents were utilised to achieve expansion outcomes. Higher expansion factors are considered likely with optimisation of pre- conditioning process and reagents.

4. Successful first expansion tests firmly establish Hexagon's McIntosh concentrate as a viable product in the expandable graphite market.

5. This result is another major advancement of understanding the properties of McIntosh flake graphite as Hexagon continues product development work aimed at optimising the value and profitability of production and diversifying its product portfolio into various premium priced market segments leveraged to the rapidly growing battery and high-tech sectors.

6. Benchmark Minerals reports 20-30% price increases this year for flake graphite across various size classifications for the standard 94-95% total graphite grade range. Higher purity, larger flake concentrate is expected to achieve significant price premiums.

1. BACKGROUND

   On 7 November, 2017 Hexagon reported on the large flake endowment of its deposits as assessed from both petrographic analysis of drill core and screen size analysis of graphite concentrate both highlighting the high proportion of Large to Super-Jumbo sized flake as shown in Figure 2. It was also able to report confirmatory work on the high-purity of its graphite material, lack of known deleterious elements and likely suitability for advanced segments of the battery market.

   This announcement is a continuation of test work outcomes arising from the recently formed partnership with a US company, referred to as "NAmLab1", which specialises in graphite-battery technologies; from research, to test work and commercial manufacturing. NAmLab has been certified by the US Department of Defense to be ISO 9001:2008 compliant in Quality Systems and importantly, has a commercial production arm.

   Hexagon is in the product development phase through test work to characterise optimal end use opportunities for McIntosh graphite concentrate with particular focus on higher purity products. There are many niche markets that this test work is assessing, with a view to diversify Hexagon's product range further and increase its exposure to premium graphite pricing opportunities.

   Figure 2: Flake Size Distribution in Concentrate Sample.

   1 Hexagon Resources does not wish to disclose the name or specific location of the laboratory testing facilities in order to maintain its competitive advantage. For competitive reasons graphite companies do not typically disclose details of the laboratories doing their product test work.

2. EXPANSION TEST WORK OUTCOMES
3. Expansion Test Results

   Test work was undertaken on a sample of McIntosh flake graphite concentrate (HXGCon1) generated from batch test work completed in 2016 on a 100kg composite sample of drill core from the Emperor deposit.

   The Results are summarised in Table 1 below. The Expansion Volume for a plus 60 Mesh (+250

   µm) sized flake had an approximate value of 160mL, while for a +80 mesh it amounted to a low 24mL. Expansion factors typically correlate to flake size and for the Emperor deposit there is a clear demarcation between +60 and +80 mesh sizes i.e. between 180 and 250 µm in terms of both expansion volumes and flake size abundance (Refer to Figure 3). This is important for optimising the primary process flow sheet and based on the flake size test work reported previously highlights the opportunity to recover a large proportion of the overall graphite flake to this product.

   Table 1: Expansion Test Work Results from NAmLabs

   Sample ID (HXGCon1)	Initial Mass (g)	Final Mass (g)	Expansion Volume (mL)	BET Surface Area (m2/g)	Volatiles Content1 (g)	Weight% Volatiles2	Expansion Coefficient3 (mL/g)
   +60 Mesh	1.0008	0.7275	160	21.63	0.2733	27.31%	219.93
   +80 Mesh	1.0040	0.7740	24	9.41	0.2300	22.91%	31.01

   1. = − .

   2. % = × 100;

   3. = .

   Figure 3: Frequency Histogram from Flake Size Screen Analysis*

   *Screen Analysis by RX-29 Ro-Tap Test Sieve Shaker/cross referenced by laser diffraction method (Microtrac S3500).

   The resultant product from the expansion test has an appearance of vermiform, accordion- looking structures, commonly referred to as "graphite worms".

   The BET surface area of +60 mesh expanded graphite was registered at 21.63 m2/g, which puts McIntosh flake in line with a number of competitor materials on the expandable graphite market. NAmLabs commented that it is very confident that the Expansion Coefficient and BET surface area could be easily increased in the future as a result of optimisation of flake concentrate sizing and graphitic carbon content as well as fine-tuning the composition of the intercalant acids.

4. Test Work Methods

5. The objective of this test work was to examine McIntosh graphite flake for thermal expansion properties and quantifying through calculation of an Expansion Coefficient.

   Two sub-samples were recovered from the HXGCon1 sample; one with flake size plus 60 Mesh (250 µm) and the other plus 80 Mesh/minus 60 Mesh (180 to 250 µm).

   Each sample was subjected to a process commonly referred to as intercalation which in the context of work reported herein is defined as "insertion" of SO42- and NO3- anions from Sulphuric and Nitric acid respectively, in-between graphene layers of the graphite particle. These acids are standard, low cost commodity chemicals and no exotic chemicals or additional heat treatment was required to achieve the intercalation. The resultant acid intercalated material was dried in a convection oven at 200°C. This temperature is low enough to not volatilise the acid within the graphite structure, but it is sufficient to drive off all surface moisture, rendering a fully dry free flowing product. Intercalation resulted in the creation of a new intermediate graphite "macromolecule" with anions between the graphene layers which are maintained in parallel alignment by weak Van der Waals bonds, ready and primed for the next phase.

   Figure 4. Dry acid intercalated +60 Mesh McIntosh graphite prior to heat expansion.

   For each of the two samples, approximately 1 gram of dried-intercalated graphite was weighed out on to a grafoil tray (Figure 4) to thermally expand in a muffle furnace. The rapid heat shock at approximately 950˚C leads to in-situ gasification and an "explosion" or "popping" of the graphite macromolecule (refer Figure 5). This expansion process occurs in seconds leading to the creation of the expanded graphite or graphite worms as shown in Figure 6.