Hillgrove secures $10m debt facility and continues Kanmantoo copper ramp-up

Hillgrove secures $10m standby debt facility from Freepoint Metals and Concentrates
Kanmantoo copper production increases 13% to 2932t
All-in costs remain stable at US$3.71/lb copper, with operational improvements on the cards

Special Report: Hillgrove Resources has secured a $10m debt facility with Freepoint Metals and Concentrates, providing financial flexibility as it scales up operations at the Kanmantoo copper mine.

The standby debt facility, which follows a market competitive process, will be available in two tranches of $5m with the final instalment payable 12 months after first drawdown.

The company currently does not expect to use the funds but will have more options to pursue exploration and growth as it ramps up the mine.

The willingness of financiers to provide Hillgrove Resources (ASX:HGO) with a debt facility highlights their confidence in the company and its Kanmantoo project, which remains on track with its production ramp-up.

“We are pleased to have secured this stand-by debt facility which provides the Company with ongoing financial flexibility and demonstrates we are taking a prudent approach to managing our balance sheet,” managing director Bob Fulker said.

He added that the company has the opportunity to significantly grow ore reserves and extend the Kanmantoo mine life.

“This improved balance sheet flexibility will enable us to pursue this opportunity while we continue to focus on safe and reliable copper production,” Fulker said.

HGO had announced a maiden ore reserve of 2.8Mt grading 0.91% copper and 0.15g/t gold on October 18 and upgraded copper resources by 96% to 150,000t and gold by 138% to 82,000oz.

All operational metrics improving

During the September quarter, copper production at Kanmantoo increased by 13% quarter on quarter to 2932t in 12,656t of concentrate while processed ore increased by 4% QoQ to 266,000t.

Mining rates rose 33% QoQ to 279,723t as mine development achieved 1,401m while all-in-costs of US$3.71/lb remained in-line with costs in the June 2024 quarter.

HGO reported revenue of $36.9m in the quarter, though cash flow was impacted by the timing of campaign milling with ~20,000t of ore sitting on ROM pads at quarter end.

However, the combination of improved developed and drilled stoping stocks, an increase in tonnes available to be processed and capital works undertaken in the September 2024 quarter ensure Kanmantoo is set up for delivery in the December 2024 quarter and beyond.

“We continued to see significant operational improvements across all metrics post declaring commercial production on 1 July 2024,” Fulker said.

“While there are still many opportunities to improve production rates and reduce costs as we move closer to steady state production, it is pleasing to see the strong progress being made at Kanmantoo.”

Exploration potential

The company noted that Kanmantoo still has extensive copper exploration potential with along strike and down-dip extensions of the main Kavanagh and Nugent copper-gold resources to be tested.

Other notable targets include the Emily Star down dip extension, Valentine and Paringa, as well as the Coopers and North Kavanagh deposits north of the Kavanagh underground development.

HGO’s focus during the September quarter was on grade control definition drilling and resource drilling at Kavanagh and Spitfire.

The Nugent incline has also continued to progress with drilling from the first underground drilling platform to occur early in the December quarter. This will provide an improved drill angle and easier depth extension in comparison to surface drilling.

Drilling completed on a geophysical anomaly ~400m north and ~600m beneath the northern extension of the Kanmantoo open pit has also identified mineralisation consistent with the down plunge extents of North Kavanagh.

Looking further afield to its 4187km2 of exploration tenure within the Kanmantoo Province in South Australia’s south-east, the company plans to assess four targets in the next two years to narrow its exploration focus into areas where it sees high value opportunities.

Additionally, the Geological Survey of South Australia is investigating the province for its magmatic related copper-gold endowment as a consequence of the discoveries on the Stavely Belt in western Victoria.

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.