Hillgrove bolsters balance sheet amid Kanmantoo growth focus

Hillgrove Resources (ASX:HGO) has completed a $10 million capital raising via a two-tranche placement, which will be used to ramp up production and extend the mine life of its Kanmantoo Copper Mine in South Australia. 

Canaccord Genuity acted as the sole lead manager for the placement. 

Hillgrove, which has a $128.10 million market capitalisation, will use the proceeds towards mine extension drilling down dip of existing lodes, drilling of other deposits within the mining lease, drill testing ‘significant’ Kanmantoo deeps targets, and general working capital. 

Chief Executive Officer and Managing Director Lachlan Wallace says since the recent start of copper production from Kanmantoo, the company has sought to expedite exploration across multiple ‘exciting’ targets. 

“This can have a material impact on the value of the company and we want to push this ahead as quickly as possible. The $10 million placement facilitates this exploration growth and also provides working capital support to ramp up the underground mining to the planned steady state production rate. 

We have seen extraordinary success in our exploration efforts with 139 holes drilled for 163 significant intercepts of copper and gold. Kanmantoo is a predictable and structurally controlled system and as we drill more, we find more copper. 

We look forward to accelerating the drilling, with a view to growing the resource and mine life, and increasing annual copper production.”

The first tranche involved the issue of about 133.376 million new shares at an issue price of $0.060 per share, raising $8 million. 

The allotment of news shares under tranche one is expected on 1 March 2024.

Meanwhile, the second tranche included Hillgrove entering into a binding commitment letter with Freepoint for the issue of about 33.289 million new shares at $0.060 per share. 

The commitment letter is subject to approval by the Foreign Investment Review Board (FIRB) under the Foreign Acquisition and Takeovers Act.

Hillgrove 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 a fortnight ago, as reported by Mining.com.au

Production of the first copper concentrate from its Kanmantoo Underground Mine in South Australia was achieved within the desired and previously announced expected timeframe of Q1 2024.

The Kanmantoo mine sits some 55km from Adelaide and operated as a series of open pits from 2010 to 2020, producing about 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 says global copper consumption was estimated to grow by 7.3% in 2023, and Australia’s copper export earnings are forecast to reach some $12.8 billion in 2023-2024.

As of 31 December 2023, the company had $10.240 million cash and cash equivalents at hand, according to its latest quarterly report. 

Write to Aaliyah Rogan at Mining.com.au   

Images: Hillgrove Resources
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Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.