• Following first copper production, Hillgrove has raised $10m to accelerate mine expansion and exploration drilling at Kanmantoo
  • Drilling is aimed at resource growth to increase annual production and mine life

 

Special Report: Newly reinstated copper producer Hillgrove Resources has raised $10 million to accelerate mine expansion and exploration drilling at its Kanmantoo underground operation in South Australia.

Kanmantoo produced ~137,000t of copper and ~55,000oz of gold from a series of open pits between 2010 and 2020 before the 3.6Mtpa process plant and tailings storage facility were placed on care-and-maintenance.

While Hillgrove Resources (ASX:HGO) was aware that the mined lodes continued at depth below the open pit, it had no idea just far down they went.

This prompted a modest program of initial drilling that provided the first inkling that an underground operation could be possible, a finding that quickly led to further drilling and ultimately the start of copper concentrate production earlier this year.

Current operations are expected to deliver between 12,000t and 15,000t of copper per annum over the next four years, though a fairly large exploration target of 60-100Mt @ 0.9-1.2% and 0.1-0.2g/t presents the opportunity for the mine life to be extended.

Additionally, just 40% of the plant’s capacity is being used, meaning that an increase in mine throughput and copper production is entirely possible, which would deliver a substantial uplift to free cashflow.

 

Capital raising to grow resources and production

HGO has now raised $10 million through a placement of shares priced at 6c each – a 10.4% discount to the last traded price.

Institutional and sophisticated investors have already committed to subscribing for $8 million worth of shares, while the remaining $2 million will be placed with Freepoint, HGO’s major shareholder.

Further drilling is expected to deliver significant growth in the project’s scale as Kanmantoo is currently limited by the extent of drilling, with all on-lease mineral zones remaining open down dip and along strike.

Initial targets are expected to include the Kavanagh, Spitfire, Emily Star and Paringa lodes, though future work is likely to test the large Kanmantoo Deeps target that could be a real gamechanger if it is proven to be a repeat of the main project.

HGO managing director Lachlan Wallace said the company was seeking to accelerate exploration over a number of “exciting” targets.

“We have seen extraordinary success in our exploration efforts with 139 holes drilled for 163 significant intercepts of copper and gold,” he says.

“Kanmantoo is a predictable and structurally controlled system and as we drill more, we find more copper. We look forward to accelerating the drilling, with a view to growing the resource and mine life, and increasing annual copper production.”

 

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.

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