Hillgrove is confident it can materially expand the scale of the Kanmantoo copper and gold mine in South Australia ahead of the restart of the country’s next operating copper mine in early 2024.

Hillgrove Resources (ASX:HGO) has announced a new exploration target of between 10-20Mt of copper rich ore with a target grade of 0.9-1.3% copper and 0.1-0.3g/t gold, based on six of the nine higher grade copper-gold zones already mined in the project’s open pit or intersected in exploration drilling.

Early works started last week at Kanmantoo, where the recommencement of copper sales next year will see HGO return to the exclusive ranks of the ASX’s listed copper producers.

The mine is expected to deliver $205m of post tax free cash flow at a remarkable internal rate of return of 231%, producing 43,500t of copper and 11,500oz of gold from 4.5Mt of ore over a 45 month mine plan.

That comes with a lead time of only seven months from the start of construction to copper sales, with a nine-month payback period on its fully-funded $25m capital bill thereafter.

Leveraging knowledge from years of prior operation and an existing 3.6Mtpa processing plant, it is a stunning pace in the context of an industry where copper mine developments elsewhere are getting slower and more difficult to deliver.

That plan does not include 6000t of contained copper identified after additional drilling at the Nugent orebody.

Today’s announcement of the new exploration target outside the mine’s resource of 6.4Mt at 1.09% Cu and 0.12g/t Au suggests there is plenty of room for material underground resource growth.

 

Drill testing to begin 

A new drill rig has been secured with drill testing of the new exploration target expected to begin later this month, initially to target life extension opportunities down dip of the existing mine design and find additional lodes which could be developed to increase annual production.

HGO says most of its exploration targets are outside the 800m Kananagh copper and gold system, and have only been drilled to less than 120m in depth.

The drilling will target life extensions down dip of the existing mine design at Nugent and Kavanagh as well as strike extensions and parallel lodes.

There is plenty of history to suggest it can be successful given the wins seen in recent extensional drilling, where hits at Emily Star and North Kavanagh confirmed the location of copper and gold mineralisation proximal to the existing underground mine plan as anticipated in previous exploration target compilations.

“The success of the previous Exploration Target to identify Cu-Au mineralisation has given Hillgrove the confidence to continue to identify future UG copper resources with the objective to expand the Company’s copper production profile and mine life,” the company said.

 

Multiple targets

Extensions to the major Nugent and Kavanagh orebodies make up between 50-60% of the tonnage being addressed in the new exploration target at 2-4Mt at 0.8-1.3% Cu and 0.3-0.5g/t Au, and 4-6Mt at 1-1.4% Cu and 0.1-0.3g/t respectively.

Also on the Kanmantoo mining lease, HGO thinks it could identify between 4-8Mt of copper ore at 0.8-1.2% Cu at Emily Star, Paringa, North Kavanagh and Coopers.

Hillgrove also has an exploration target for the South Kanmantoo (2-4Mt at 0.8-1.2% Cu, 0.1-0.3g/t Au) and Stella (2-4Mt at 0.8-1.2% Cu, 0.1-0.3g/t Au) prospects on Exploration Licence 6526, around 500m from Kanmantoo.

Previous drill results from Stella and South Kanmantoo include:

Stella (2021)

  • 3m at 2.76% Cu, 3.53 g/t Au from 343m depth (SLDD001)
    • Including 0.6m @ 10.1% Cu, 16.86 g/t Au from 344m depth
  • 6.56m at 0.77% Cu, 0.84 g/t Au from 173m depth (KAN01) and
  • 0.9m at 0.18% Cu, 9.28 g/t Au from 156.4m depth

South Kanmantoo (2010)

  • 5m at 2.5% Cu, 0.8 g/t Au from 13m depth (KTRC742)
  • 17m at 0.95% Cu, 0.35 g/t Au from 48m depth (KTRC757); and,
  • 5m at 2.95% Cu, 0.36 g/t Au from 24m depth (KTRC759).

 

 

 

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.