Emerging producer Hillgrove hits 45.4m at 1.2% copper, eyes potential mine life extension

Diamond drilling highlights mine life extension potential at Kanmantoo
The company has commenced underground development and on track for first copper production in Q1 2024
Further drilling is planned at the Spitfire Lodes

A 100m ‘step out’ drill hole at Hillgrove Resources’ Kanmantoo mine in South Australia has delivered 45.4m at 1.2% copper, increasing the mineralisation footprint in the Kavanagh lode system.

The company is gearing up for the restart of copper production at the project in Q1 2024, with Stage 1 development to tap some 4.5Mt of the project’s underground resources to deliver 43,500t of copper and 11,500oz of gold over 45 months.

Hillgrove Resources (ASX:HGO) is poised to benefit from predicted rising prices for the red metal, fuelled by strong demand from the clean energy transition.

“I’d say that probably the best fundamental getting around in commodities at the moment is copper,” Lion Selection Group’s Hedley Widdup recently said.

I think in the next cycle those peaks should be … driven by things like electrification. But copper has a wonderful old world economy demand growth going forward as well.

“Just as a great snapshot, I think every 25 years, we’ve doubled demand for copper. When you think about that, there’s a real squeeze to come into the price.”

Growing the mine life at Kanmantoo

Latest diamond drilling indicates the Kavanagh mineral system continues to host wide zones of higher-grade copper-gold breccia within 100m from, and adjacent to, the planned underground (UG) development and which are not included in any current mineral resource estimate.

The “outstanding” results ~100m from the nearest copper intercept and 70m from the resource envelope include:

4m at 1.19% copper, 0.12 g/t gold from 428.5m downhole (KTDD243_W1), including 5.35m at 2.13 % copper, 0.11 g/t gold from 428.5m downhole; and
9m at 1.53 % copper, 0.12 g/t gold from 444m downhole, including 6.6m at 2.31% copper, 0.23 g/t gold from 460.4m downhole.

Spitfire lodes could extend mine life

These drill intercepts are mainly within the Spitfire copper-gold mineral system which has not previously been the focus of the surface exploration drilling programs.

Hillgrove CEO and MD Lachlan Wallace says there’s potential to increase the existing mineral resource inventory and extend project mine life.

This comes after the company reported high grade strikes – and the potential for mine life extensions – at its Emily Star lode last month.

The company says further drilling from UG and from surface is warranted to determine the down-dip and along strike extent of these copper breccia zones at Spitfire.

“The drilling continues to demonstrate the continuity of the copper mineralisation below the current mine design,” Wallace says.

“The two holes in Spitfire show the potential for Spitfire to extend at least a further 70m down dip, as well as along strike, with the most northern hole in Spitfire returning a downhole drill intersection of over 45m at 1.19% copper and 0.12 g/t gold and remaining open to the north.

“The close proximity of the Spitfire lode to the current underground decline development provides an opportunity to bring these lodes into the early stages of the mine plan for modest incremental cost.”

First production coming soon

The mine is on track to produce first copper in Q1-2024, making Kanmantoo Australia’s next copper producer.

Underground development started in May this year and has quickly ramped up to planned development rates with further increases expected towards this year with the arrival of a second jumbo, which is used for underground development.

Kanmantoo will benefit from both the low pre-production capital expenditure of $25m and all-in sustaining cost of $8,051 to deliver net present value and internal rate of return – both measures of a project’s profitability – of $165m and 231% respectively.

This article was developed in collaboration with Hillgrove Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.