Shareholders have demonstrated their support for Hillgrove’s plan to start underground mining at its Kanmantoo copper-gold project by acquiring about $2.2m worth of shares under its share purchase plan.

The purchase of 41.7 million shares priced at 5.3c each makes up a major chunk of the $3m worth of shares which the company had offered under the non-underwritten SPP and adds to the $36.2m raised by its placement to Freepoint Metals & Concentrate along with new and existing institutional investors.

Proceeds from the placement and SPP will be used by Hillgrove Resources (ASX:HGO) to fund development of Kanmantoo – including sufficient contingency, exploration to expand the mine plan and for general working capital.

“We appreciate the strong support we received from a large number of our shareholders for the SPP, which reflects a strong endorsement of the company’s strategy to restart mining operations at Kanmantoo as well as further exploration to continue to expand the resource and extend the mine plan,” managing director Lachlan Wallace said.

“In the meantime, whilst we await the final shareholder and FIRB approvals to complete the funding, early preparation works for the mine have begun, which will enable underground development to commence immediately on mobilisation.

“Moreover, drill rigs have arrived on site, which will target both mine life extension opportunities as well as enable increased annual production.”

Near-term copper producer

With Kanmantoo having all existing infrastructure and being fully permitted for mining, a restart using its underground resources is expected to cost just $25m.

Stage 1 is expected to produce 43,500t copper and 11,500oz gold over four years at an all-in sustaining cost of A$8,051/t to deliver post-tax cash flows in excess of $200 million.

Further increases to the copper price will deliver corresponding improvements to its already attractive economics while the discovery of any additional resources can be quickly translated into increased production, as the mill will only be run at 40% capacity under the Stage 1 plan.

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.