Hillgrove Resources has secured $28 million through a two-tranche placement to accelerate copper production growth at its Kanmantoo mine, focusing on the Emily Star and Nugent projects.
- Completed $28 million equity placement at $0.035 per share
- Funds to advance Emily Star drilling and Nugent development
- Nugent development ahead of schedule with production starting in December quarter
- Emily Star drilling shows promising high-grade copper intersections
- Placement strongly supported by institutional investors, second tranche pending shareholder approval
Capital Raise to Accelerate Growth
Hillgrove Resources Limited (ASX – HGO) has successfully completed a $28 million equity placement priced at 3.5 cents per share, marking a significant step in its strategy to expand copper production at the Kanmantoo mine in South Australia. The placement, conducted in two tranches, attracted strong demand from both Australian and international institutional investors, underscoring growing market confidence in Hillgrove’s growth trajectory.
Funding Key Projects – Emily Star and Nugent
The proceeds will primarily fund exploration and development activities at the Emily Star deposit, alongside the completion of the Nugent ore body development. Nugent’s accelerated timeline aims for first stope production in the December quarter, expected to add approximately 0.3 to 0.4 million tonnes per annum to Kanmantoo’s feed, lifting total throughput to around 1.7 to 1.8 million tonnes per annum. This incremental feed is anticipated to lower unit operating costs, benefiting from Kanmantoo’s largely fixed cost base.
Emily Star has delivered encouraging drill results, including multiple high-grade copper intersections with accompanying gold credits, reinforcing its potential as a third mining front at Kanmantoo. Hillgrove plans to use part of the raised capital to advance drilling and pre-development infrastructure at Emily Star, with total capital expenditure estimated between $20 million and $25 million to bring the project into production.
Placement Structure and Market Reception
The placement comprises 800 million new shares issued at a 12.3% discount to the five-day volume weighted average price, split into an immediate tranche of approximately 654 million shares and a second tranche of 146 million shares subject to shareholder approval. The company expects to settle and allot the first tranche in early October, with the second tranche timing dependent on the upcoming general meeting.
Hillgrove’s CEO, Bob Fulker, highlighted the strong investor appetite for junior copper producers poised to scale operations amid a tightening global copper supply. He emphasized that the placement positions Hillgrove well to capitalize on market opportunities and transition towards mid-tier producer status.
Outlook and Operational Implications
With Nugent development progressing ahead of schedule and Emily Star showing promising exploration results, Hillgrove is set to enhance operational flexibility and efficiency at Kanmantoo. The additional feed from these projects is expected to reduce unit costs and support sustainable cash generation. However, the success of Emily Star’s development remains contingent on forthcoming drilling outcomes and shareholder approval for the second tranche of the placement.
Bottom Line?
Hillgrove’s $28 million raise sets the stage for expanded copper production, but execution risks remain as Emily Star’s potential unfolds.
Questions in the middle?
- Will Emily Star drilling confirm sufficient mineralisation to justify full-scale development?
- How will the market respond to the dilution from the placement once the second tranche is approved?
- What are the potential operational challenges as Kanmantoo integrates additional feed from Nugent and Emily Star?