Hillgrove's Kanmantoo underground development thumbs up set to deliver first copper in Q1 2024

Hillgrove is well and truly on the path back to copper production after pressing the green button on the final investment decision for Stage 1 development of its Kanmantoo underground mine in South Australia.

The fully-funded development decision is the culmination of some two years of work aimed at confirming sufficient underground resources to support a restart, which leverages the presence of existing infrastructures such as the 3.6Mtpa processing facility and operational tailings facility used by the previously operating open cut mine to lower costs and risks.

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

Hillgrove Resources (ASX:HGO) says it is on track to deliver first copper concentrate production in the first quarter of 2024 and has already started stockpiling ore intersected from the development.

Additionally, the processing plant and tailings storage facility are being prepared for commencement of processing.

“The formal decision to commence mining at Kanmantoo is an exciting milestone for the company,” managing director Lachlan Wallace said.

“It comes on the back of completing a $38m placement and share purchase plan, which was strongly supported by existing and new shareholders, and positions the company to commence development without any debt.

“This in turn de-risks the project by providing operational flexibility, and enables the mine to be developed with a focus on delivering project value, rather than a debt repayment schedule potentially influencing operational decisions.”

Copper sustaining the energy transition

The Stage 1 development will tap some 4.5Mt of the project’s underground resources to deliver 43,500t of copper and 11,500oz of gold over 45 months.

This will benefit from strong prices for the red metal – currently US$3.88 a pound, which is fuelled by strong demand and expectations of a crippling deficit.

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.

There’s also plenty of room for further growth by carrying out exploration to convert the Exploration Target of between 10Mt and 20Mt of ore grading 0.9% to 1.3% copper and 0.1g/t to 0.3g/t gold into JORC resources.

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.