This article is a sponsored feature from Mining.com.au partner Heavy Minerals. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Heavy Minerals (ASX:HVY) is charting a pathway to near-term production by prioritising a low-capex tailings processing operation at the Kanmantoo Copper Mine and tailings facility, positioning the company to unlock cashflow ahead of larger, longer-dated developments.
In late January 2026, the company executed a binding tailings processing agreement with Hillgrove Resources’ (ASX:HGO) subsidiary Hillgrove Copper for the extraction and sale of garnet from the Kanmantoo Copper Gold Mine in South Australia.
Under the agreement, Heavy Minerals will construct and operate a garnet processing plant at Kanmantoo Copper Gold Mine in South Australia, to recover garnet from the existing Copper Tailings stream, with the potential to recover garnet from the Tailings Storage Facility (TSF) following completion of Hillgrove’s mining operations.
It’s a significant agreement for an important yet little understood commodity. Garnet is a specialised industrial mineral used in waterjet cutting and other abrasive applications, with global waterjet cutting consumption of about 500,000 tonnes per annum.
This niche commodity is attracting growing global attention for its reliability, its specialised applications, and the increasingly strategic nature of its supply.
Unlike most industrial minerals, garnet exists in a world without a spot price, without widely published datasets, and without the market transparency that defines traded commodities.
Instead, it operates through long-term sales contracts, deeply entrenched distributor networks, and quality-driven purchasing decisions shaped by end-user performance requirements. That makes garnet a fascinating study in how industrial mineral markets function – and why supply, demand, and quality are now becoming critical watchpoints for global industry.
Heavy Minerals foresees demand increasing. As such, Hillgrove anticipates Heavy Minerals will produce up to 50,000tpa for the first three years, doubling to 100,000 tonnes in year four.
Speaking to Mining.com.au, Heavy Minerals Executive Chairman Adam Schofield says the agreement comes after 18 months of negotiations, testwork, process flow and plant designs, as well as capital estimations, financial modelling, logistics, distributions, and contract negotiations.
When the Executive Chairman begins outlining the company’s funding ambitions, the headline numbers initially appear ambitious. Heavy Minerals is looking to raise up to $30 million against a market capitalisation of about $38 million.
Yet according to Schofield, the structure of the Kanmantoo tailings opportunity fundamentally changes how the market should assess things. Importantly, the capital will be raised through debt funding, pre-sales, and royalties.
Heavy Minerals is already advancing discussions with distributors in Australia, Europe, and the US.
Schofield explains the company is deliberately focusing on a development pathway that limits dilution, shortens timelines, and reduces technical and permitting risk.
“What we’re doing here is very different to building a mine from scratch”
“What we’re doing here is very different to building a mine from scratch,” he tells this news service.
“We’re not the miners. We don’t deal with tailings storage facilities, permitting, or mining risk. All of that already exists. We’re effectively bolting a processing plant onto the back of somebody else’s operation.”
Heavy Minerals will pay an initial $50,000 on execution of the agreement, which will be followed by a $150,000 exclusivity fee, subject to a final investment decision.
The company will then pay 15% of gross revenue for the life of existing copper-gold mining operations, 5% of gross revenue for the life tailings storage facility processing by Heavy, and a flat royalty of $25 per tonne of out of specification garnet sold.
After initial production, Heavy Minerals will pay a minimum of $500,000 annually, which will increase to $1 million once the processing plant is upgraded to a capacity of 100,000 tonnes per annum.
Once Hillgrove ceases copper and gold production from the site, Heavy Minerals will likely take over the Kanmantoo mining leases.
Financing without dilution
A central challenge for Heavy Minerals is communicating a funding strategy that relies primarily on debt rather than equity. Schofield notes that while the company cannot yet publish a financial model due to the absence of a JORC-compliant resource, the scale of the opportunity at Kanmantoo is material.
Hillgrove’s Kanmantoo Mine 2025 mineral resources estimate (MRE) sits at 22Mt @ 0.74% copper and 0.17g/t gold, containing 160,000t of copper and 120,000oz of gold. The ore reserve estimate (ORE) for Kanmantoo is 4 million tonnes @ 0.85% copper and 0.22 grams per tonne gold, containing 34,000 tonnes of copper and 29,000 ounces of gold.
Heavy Minerals expects to extract about 12.5% of that material under its agreement. Schofield suggests this places the company in a position to access significant long-term feedstock without the capital burden of owning or operating a mine.
Beyond that, the tailings storage facility associated with the operation reportedly contains 28 million tonnes grading between 15% and 20% contained garnet. While Heavy Minerals cannot state a resource itself, Schofield notes the implied scale is substantial.
“If you run those numbers, even conservatively, you’re looking at many decades of potential mine life,” he says.
“At 100,000 tonnes per annum of garnet, even halving recoveries, you’re still talking about 25 to 30 years.”
That scale underpins a funding plan centred on debt. Schofield explains that even at a 35% gearing ratio, the equity contribution required would be modest relative to the company’s current market capitalisation.
“Even in a worst-case scenario, we’re talking about raising $7.5 million dollars against a forty million market cap”
“Even in a worst-case scenario, we’re talking about raising $7.5 million dollars against a forty million market cap,” the Executive Chairman says. “That’s not significant.”
The company has also been negotiating a 25% capital cost deferral with IHC Mining, a division of Royal IHC, equating to roughly $4 million to $5 million, payable within the first year of production.
Combined with potential pre-sales arrangements with distributors, Schofield says Heavy Minerals could fund up to half of the required capital without tapping equity markets.
“In that scenario, we’re potentially only looking to raise $10 million,” he says. “I’m very confident we can do that on debt.”
IHC Mining specialises in providing engineering, consultancy, and equipment for heavy mineral sands extraction, particularly in fine sand deposits. They provide services for identifying and processing minerals such as garnet, zircon, rutile, and ilmenite and were involved in the Prefeasibility Study (PFS) for Heavy Minerals’ Port Gregory Project in Western Australia.
Shareholder alignment
Schofield acknowledges that its fundraising to date has been novel, particularly for retail investors. However, he points to the company’s tightly held register as evidence its fundraising methodology is working.
Heavy Minerals has about 700 shareholders, with the top 20 accounting for an estimated 60% to 75% of the register. Schofield says most of the remaining retail exposure comes via investment platforms rather than unengaged holders.
“Our shareholders matter and they understand what we’re doing,” he tells Mining.com.au.
“They’ve seen the share price move from five cents to around fifty-five cents over the last 12 to 18 months because they have faith in our strategy and that we will deliver.”
He attributes that performance to consistency rather than promotion. “People trust that we haven’t dropped the ball,” Schofield says. “We’ve done the Kanmantoo transaction in the background while staying within pretty much the same budget we outlined to complete the Port Gregory PFS.”
“We’ve done the Kanmantoo transaction in the background while staying within pretty much the same budget we outlined to complete the Port Gregory PFS”
The company’s PFS timeline has extended longer than initially expected, though Schofield resists the idea it represents a setback. Instead, the delay is a function of pursuing non-dilutive funding options and advancing multiple workstreams in parallel.
He notes that raising $4 million through a royalty structure over a two-and-a-half-year period has taken much longer than conventional capital raises but has delivered outsized benefits for shareholders.
That process alone added at least six to nine months. But from a dilution perspective, Schofield says it has likely saved shareholders hundreds of millions of dollars in potential dividends over the expected life of mine of its current projects.
The extended timeline also created space to identify Kanmantoo as a first development step, rather than immediately pursuing the far larger capital-intensive project at Port Gregory.
“If the PFS had been completed within the year earlier, we’d be asking now to raise a hundred million dollars. We wouldn’t have had the bandwidth to look at Kanmantoo,” Schofield continues.
He describes the sequence as logical but also fortuitous, adding that “doing Kanmantoo first simplifies everything”.
The trade off? Raising $30 million for a highly de-risked project, rather than a $100 million for something much more complex.
A simpler pathway
As Scholfield reiterates to Mining.com.au, Heavy Minerals’ strategy reflects a broader shift among junior resource companies toward staged, capital-efficient development. By prioritising processing over mining ownership in the case of Kanmantoo, the company reduces both capital intensity and execution risk.
For lenders, the due diligence burden is dramatically different, Schofield says, adding this is heavily de-risked compared to most projects.
Rather than viewing the aforementioned PFS timeline as a constraint, the company has treated its Kanamantoo Garnet Project as a parallel process that will benefit from early cashflow generating operational and distribution experience.
“The delays gave us the opportunity to do something smarter,” Schofield says. “Things appear to have worked out the way they probably should have.”
“The delays gave us the opportunity to do something smarter”
As Heavy Minerals advances toward funding and construction decisions, the Executive Chairman says Kanmantoo is emerging not as a side project but as the foundation of a broader strategy – prove the model, generate cash, and build optionality from a position of strength.
As mentioned, the Kanmantoo agreement sees Heavy Minerals secure access to tailings for a modest upfront consideration, which Schofield describes as highly favourable given the scale of potential output.
Hillgrove Mining states it expects Heavy Minerals to process 50,000 tonnes per annum for the first three years, ramping up to 100,000 tonnes from year four. Schofield believes that timeline could accelerate materially.
“I think that the potential hundred thousand could come forward by almost 18 months. We’ll probably do fifty thousand in the first year straight off the bat,” he continues.
The company has initially modelled a ramp-up phase but now expects to move directly to maximum throughput. That shift reflects the simplicity of the operation relative to other developments. With mining, permitting, and infrastructure already in place, the key execution risk becomes plant construction and commissioning, the Executive Chairman adds.
Schofield places little emphasis on short-term trading dynamics. Instead, he frames Heavy Minerals as a long-duration cashflow business once production begins.
“This isn’t about appealing to people who want to buy and flip the stock. It’s called shareholding for a reason,” Schofield laughs.
Based on public tailings figures, Schofield suggests Kanmantoo alone could support dividends for multiple decades, even after conservative recovery assumptions.
“On paper, you’re potentially looking at a thirty to forty-year life of mine just at Kanmantoo,” he says. “What’s that worth?”
The company currently has about 69 million shares on issue. Schofield says keeping that figure below 100 million while achieving production is a core objective.
“If we’re producing in the next 12 to 18 months, the share price has to go north,” he says. “It surely can’t go south.”
Write to Adam Orlando at Mining.com.au
Images: Heavy Minerals, Hillgrove & Mining.com.au
