Hillgrove received a $6 million cash payout after reaching a royalty agreement with its longtime partner and supporter, Freepoint Metals and Concentrates.
In exchange for the payment, Freepoint will receive a 2.5% net smelter return on the first 85,000 tonnes of payable copper production from its Kanmantoo mine in South Australia, which will then reduce to 0.5% NSR.
Not only does payment provide Hillgrove Resources (ASX:HGO) with the funds to consider a range of resource restart and expansion options, it is also a sign of confidence in its plans to start underground mining at the project.
Managing Director Lachlan Wallace said the company was delighted to continue its long-standing partnership with Freepoint through the royalty agreement, which demonstrates its strong commitment to the development of the Kanmantoo underground project and its understanding of the benefits. of its concession exploration.
“The agreement highlights the robustness of the Kanmantoo underground project as demonstrated by the economic assessment, with subsequent updates to the Kavanagh and Nugent mineral resource estimates expected to increase mine life” , he added.
“Additionally, Nugent and Kavanagh remain open at depth and laterally, and are just two of nine mining systems that have been drilled or partially mined under the authorized lease, representing an excellent opportunity to extend the mine life. of the mine with other drillings.
“The royalty consideration immediately bolsters our undiluted shareholder cash position, allowing the company to consider a range of resource restart and expansion options, particularly in light of recent changes in the global market. copper.”
Freepoint senior managing director Philip Bacon said the close relationship between the two companies had been nurtured over a long period and included funding Kanmantoo’s technical studies in the early days.
“Freepoint looks forward to restarting operations in Kanmantoo and continuing our long-term partnership with Hillgrove,” he added.
Kanmantoo Underground Mining
Kanmantoo’s underground mining plan aims to bring deeper resources from the project – located just 55km southeast of Adelaide – into production.
The resources of the Kavanagh and Nugent deposits currently total just under 7 Mt grading 1.08% copper and 0.16 grams of gold per tonne, or 75,900 t of contained copper.
Recent results have also been encouraging with assays from 12 recent drill holes in the Spitfire copper-gold system, which were drilled from the Kanmantoo underground development, returning notable results such as:
- 82 m at 0.95% copper, 0.18 g/t gold from 53.38 m downhole;
- 55 m at 1.72% copper, 0.22 g/t gold from 56.45 m downhole; and
- 13 m at 2.1% copper, 0.18 g/t gold from 72 m downhole.
This extended the Spitfire zone to over 100m in length and is still open down-dip, and confirmed the company’s decision to use the exploration decline as a platform for underground drilling of copper- additional gold near the main Kavanagh system.
It also highlights the down-dip continuity of the zones mined in the Giant open pit and their potential to add significant tonnes per vertical meter for underground mining.
This article was developed in conjunction with Hillgrove Resources, a Stockhead advertiser at the time of publication.
This article does not constitute advice on financial products. You should consider obtaining independent advice before making any financial decisions.