This article is a sponsored feature from Mining.com.au partner Larvotto Resources Limited. It is not financial advice. Talk to a registered financial expert before making investment decisions.
It is all systems go for Larvotto Resources (ASX:LRV), having secured project financing in record time and given the green light for the development of only the second antimony mine in Australia.
Mandalay Resources’ (TSX:MND) Costerfield Gold-Antimony Mine in Victoria, which produced 1,282 tonnes in 2024, is currently Australia’s only active operation producing antimony.
Managing Director Ron Heeks says Larvotto’s Hillgrove Antimony-Gold Project is the next cab off the rank by a long way given its more advanced stage.
“Nobody’s within five years of production,” Heeks tells Mining.com.au.
“We’re going to be in production eight months from now, and project payback is 11 months.”
The anticipated quicker-than-usual payback has been enabled by the recent strategic move to secure bond financing as opposed to pursuing other traditional financing methods such as a bank loan or full equity financing.
In July, Larvotto raised US$105 million ($159.8 million) from a bond issue led by Clarksons Securities, which was followed by an oversubscribed $60 million equity raising.
A company will issue a bond that accrues interest and has to be paid back by an agreed date, but unlike other financing avenues it does not provide the bondholder with any financial benefit from the growth of the company.
Larvotto’s financing deal comprised a Nordic bond, which is a straight debt instrument that does not interfere with equity like most other debt-type structures such as royalties/streams or direct-lending with warrants.
Heeks says the company hit the financing milestone just eight weeks after releasing the Definitive Feasibility Study (DFS), which “has got to be a record”.
“I’ve been doing this for a long time, I’ve done a few of these and I don’t think I’ve ever done it in under nine months,” he says.
“In 14 months, we did a Prefeasibility Study, a Definitive Feasibility Study (DFS), a lot of drilling, and project finance. That’s a first I think.”
Record-speed financing delivers millions in savings
Heeks says having done the financing so quickly saves Larvotto millions of dollars over the time it usually would have taken to complete the financing.
“Given that we have holding costs because of the incredible infrastructure that we’ve got on site, doing it quickly saved us literally tens of millions of dollars,” he says.
The $140 million development cost of the Hillgrove project, which Larvotto acquired 18 months ago, is now fully funded.
Hillgrove is anticipated to produce 40,566 ounces of gold and 4,878 tonnes of antimony, or 85,000 gold equivalent ounces, each year at commercial production over an initial eight-year mine life.
At assumed prices of US$2,850 per ounce for gold and US$41,000 per tonne for antimony, the project is estimated in the DFS to have a post-tax net present value of $694 million, using an 8% discount rate, and an internal rate of return of 102%.
This mid-case pricing scenario would generate earnings before interest, taxes, depreciation and amortisation (EBITDA) of $2 billion and life-of-mine pre-tax free cash flow of $1.5 billion at all-in sustaining costs (AISC) of -$1,367 an ounce.
The AISC over the life of mine includes byproduct credits which more than offsets operating costs.
At a spot price of around US$3,300 per ounce for gold and US$57,000 per tonne for antimony, all-in-sustaining costs would come in at -$3,269 per ounce and boost life-of-mine EBITDA to $2.8 billion and pre-tax cashflow to $2.3 billion.
The payback period at the spot price would drop to eight months.
“The DFS delivers outstanding economics at the base case and even better at what the company firmly believes is the minimum economics that would be achieved at the mid-price commodity price scenario, which is still very conservative relative to very high spot pricing,” Heeks says.
“With production set to commence in 2026, Hillgrove is poised to become Australia’s largest producer of antimony, expected to produce 7% of global antimony requirements when global supply is tightening, and Western governments are prioritising strategic supply chains.”
When Larvotto completed the acquisition of Hillgrove from the administrators of former ASX-listed explorer Red River Resources in December 2023, it picked up a 1.4-million-ounce gold equivalent resource for less than $6 an ounce – which the company said at the time was a “significant discount to comparative transactions”.
In December 2023, the antimony price was around US$10,000 per tonne and gold was trading at around US$1,800 per ounce. Since then, antimony has surged around 300% and gold has doubled.
Wogen deal locks in antimony sales
In December 2024, Larvotto inked an offtake agreement with British trading house Wogen Resources for the antimony concentrate produced within the first seven years at Hillgrove.
Heeks tells this news service that Larvotto will receive mine gate pricing at Fastmarkets’ Rotterdam price, which is about $60,000 per tonne.
Larvotto is continuing to progress gold offtake talks.
“We’ve got all our offtakes in place on the antimony side. We’re working on the gold side. There really is no hurry there, it is a very competitive process and we’ll get that in place in the near term,” Heeks explains.
Since Larvotto acquired Hillgrove, the company’s share price has jumped over 890% to $0.695, reaching as high as $1 in late March this year.
“I’ve never seen so many things aligned,” Heeks tells this news service.
“For us it is all about getting the job done and that will flow directly through to the market capitalisation and the share price of the company.”
The Hillgrove expansion is continuing, with Heeks noting the build team will be on site early in September. Project start up is currently on track for April 2026.
Larvotto also expects to begin converting resources to reserves in the near term and releasing further drill results.
The company currently has four rigs spinning on site to drill additional deep holes to further grow the resource base.
Results from induced polarisation (IP) work are also due to be released in the next three or four weeks.
Geophysics targeting nearer surface, higher grade antimony zones largely ignored over the last 100 years of mining because of the antimony, which hindered the extraction of gold without a processing plant, is expected to continue for a “considerable amount of time”, according to Heeks.
“We see huge potential along the 20km of strike that we’ve got of mineralisation around the mine that IP can help us target considerably more efficiently,” he explains.
Write to Angela East at Mining.com.au
Images: Mining.com.au & Larvotto Resources
