A feasibility study has begun at the McIntosh flake graphite joint-venture between Mineral Resources (ASX:MIN) and Hexagon Resources (ASX:HXG) in East Kimberley, Western Australia.

The joint venture was approved by Hexagon shareholders in mid-May, giving MinRes an opportunity to earn a 51-percent share of the McIntosh project, while Hexagon would retain 49 percent. In order to achieve that stake, MinRes is to manage and effectively fund all of the development costs of the project to commercial production.

Both companies expect to execute the JV by the end of August 2018, with the feasibility study set to be completed by October 2019. Following this, the companies will decide whether or not to mine.

MinRes has approved an initial budget that would allow for a drilling program of 12,000 metres as the first “on-ground” work in the feasibility study. The program is set to start in early August 2018, and be completed by October 2018.

The purpose of the drilling program is to test resource potential of new targets east of the project’s currently known resource, confirm and upgrade existing targets and resources, and to generate around 17 tonnes of core samples for metallurgical test work.

“The joint venture partners are working together to maintain the project development momentum while project management transitions to MinRes,” a joint statement from the company read.

“Hexagon employees have been closely involved in the current planning program and will likely remain involved in key technical areas such as geology, resource delineation and field logistics as well as ongoing participation in the Native Title negotiations.”

The McIntosh project consists of a tenement package that spans 330km2, and is referred to by the company as Hexagon’s primary focus.

At the end of trading on the ASX on Friday (July 13), MinRes grew 5.04 percent to AU$16.04, while Hexagon remained stagnant at AU$0.195.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.