Hillgrove’s Kanmantoo output rises 22pc to 1025t copper in June

Hillgrove Resources’ Kanmantoo copper production climbs 22% to 1025t in June
All metrics including milled tonnage, copper grade and recovery also up
Increased production and copper price expected to deliver positive cash flow

Special Report: Hillgrove Resources has hit a major milestone after increasing copper production from its Kanmantoo underground mine in South Australia by 22% to just over 1000t in June.

It strongly validates Hillgrove Resources (ASX:HGO) move to push ahead with an underground development at the project, which had produced ~137,000t of copper and ~55,000oz of gold from a series of open pits between 2010 and 2020 before it was placed on care and maintenance.

While the company was long aware that the mined lodes continued at depth below the open pit, it was only after it carried out a modest program of initial drilling soon after the mine was shut that it got its first real hint of what was present.

This led to further drilling that quickly identified enough resources to justify underground mining and bringing the 3.6Mtpa process plant and tailings storage facility back into use.

HGO has identified a significant exploration target of between 60-100Mt at 0.9%-1.2% copper and 0.1g/t-0.2g/t gold that could extend the mine’s life, with this exploration potential leading Canaccord Genuity analyst Tim Hoff to name it as one of the ASX copper stocks to watch in an interview with Stockhead.

To top it off just 40% of the plant’s capacity is being used, meaning that an increase in mine throughput and copper production is entirely possible. That would deliver substantial uplift in free cashflow.

Commercial production achieved

HGO notes with Kanmantoo copper output reaching 1,025t in June the project has well and truly entered into commercial production.

All key metrics also improved with total milled tonnes increasing from 84,789dmt in May to 89,513dmt in June, copper feed grade rising from 1.09% to 1.23% and copper recovery up from 90.7% to 93.5%.

This continues a trend that started when processing from the underground mine begun in February this year.

High copper prices – currently above US$9,500/t – are also positive for HGO as it ramps up to higher production rates.

“We’ve had another excellent month with improvements in all key processing metrics, including milled tonnes, feed grade, and recovery,” managing director Bob Fulker said.

“With the rise in copper prices and increased production, we expect cash and cash equivalents for the quarter to be positive.

“Achieving monthly production of 1,000 tonnes of copper and generating positive cash flow within the first year is a remarkable accomplishment, which provides a strong foundation for the company’s growth.

“We look forward to sharing the cash position in the quarterly report towards the end of July, after which we will resume quarterly reporting in line with standard practices.”

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.