Hillgrove poised to cash in on new copper production

Hillgrove Resources (ASX:HGO) is now positioned as one of the few pure-play copper producers on the Australian Securities Exchange (ASX), with first revenues from sales of copper scheduled to be received this week. 

The $149.13 million market capitalisation company has begun production of the first copper concentrate from its Kanmantoo Underground Mine in South Australia within the desired timeframe of Q1 2024.

Chief Executive Officer (CEO) and Managing Director Lachlan Wallace says this milestone and imminent transition to cashflow generation is a ‘watershed’ moment for the company.

“Over the next few months, the mine output and copper production are expected to ramp-up as the planned additional work areas are established underground.

Operations will be bedded down at Kanmantoo as we ramp up to steady stage production, and our attention will turn to growing the business by converting future exploration and development opportunities.” 

Power has now been established to the underground operation, resulting in a 65% cost reduction to power use from $0.40 per kilowatt hour to $0.13 per kilowatt hour. 

Further, connection to the South Australian power grid, which is supplied by over 70% renewable energy generation, ‘substantially’ reduces Kanmantoo’s carbon footprint.

Concurrent to the copper production, a ‘significant’ opportunity exists to grow the resource and therefore mine life, as evidenced by 60 to 100 million tonne @ 0.9% to 1.2% copper and 0.1 grams per tonne (g/t) to 0.2g/t gold JORC exploration target. 

Recent drilling results from Kanmantoo include copper grades up to 3.35% from 43m downhole. 

Wallace says: “The project is well positioned to take advantage of the anticipated growth in demand for copper as the world continues to decarbonise through electrification. 

To leverage our position as a copper producer in the future, we are actively seeking to grow both mine life and the annual copper production profile through exploration, starting with our substantial 60 to 100 million tonne exploration target in close proximity to the underutilised processing plant, including the recently discovered Kanmantoo Deeps target.” 

Hillgrove’s Kanmantoo Mine sits about 55km from Adelaide and operated as a series of open pits from 2010 to 2020, producing around 137,000 tonnes of copper and over 55,000 ounces of gold. 

According to the Australian government’s December 2023 Resources and Energy quarterly report, Australia ranked second in the world for copper resources. 

The report adds global copper consumption was estimated to grow by 7.3% in 2023, and that Australian copper export earnings are forecast to reach around $12.8 billion in 2023-2024. Higher Australian production and export volumes will see export earnings reach $13.4 billion in 2024-2025. 

As of December 2023, the company had $10.24 million cash and cash equivalents at hand, according to its latest quarterly report.

Write to Adam Drought at Mining.com.au

Images: Hillgrove Resources
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.