Hillgrove Resources is seeking $39 million to restart its Kanmantoo copper project in South Australia.
In an announcement, Hillgrove said that economic assessment of the project has demonstrated strong free cash flow potential of $205 million from recommencement of operations in 2023.
“The updated study reaffirms the excellent project potential. The Kanmantoo Underground Stage 1 presents a unique opportunity to produce copper in a Tier 1 jurisdiction, generating post-tax cash flows in excess of $200 million in the initial stage,” Hillgrove chief executive officer and managing director Lachlan Wallace said.
“With all infrastructure and permitting in place, the project is well positioned for a fast, low-capital restart, with first copper production only seven months from commencement.”
Hillgrove has successfully completed a raise of $19 million in share placements, with over 300 million shares to be issued at a price of $0.05.3 each.
Hillgrove owns 100 per cent of the Kanmantoo mine, and started winding down the mining process at the site in 2019 after announcing it would transform the pit into a pumped hydro facility.
The copper mine was in operation from 1970 until 1976, but work by Hillgrove since 2004 proved an additional indicated and inferred mineral resource of 34.5 million tonnes grading 0.6 per cent copper and 0.1 grams of gold a tonne.
However, Hillgrove announced in 2021 that it had been presented with opportunities to expand the mine, undertaking over 17km of drilling and going as deep as 900m below the surface.
“All the infrastructure that we require is in place including a 3.5-million-tonne processing facility, plus a full approved and permitted tails dam with adequate capacity for the underground,” Wallace said in 2021.
“It’s this infrastructure combined with the relatively short distance between the base of the pit where the portal would be to the mineralised lodes which present a short time period and low cost to achieve first production.”
Now, mineral resources at the site have increased from one million tonnes in 2019 to almost seven million tonnes in 2022.
“Such high exploration strike rate and resource conversion provides confidence that further drilling may increase resources and expand the mine plan and generate more value for shareholders,” Wallace said.