Hillgrove Secures $1M Annual Revenue from Garnet Processing Deal
Hillgrove Resources has inked a binding deal with Heavy Minerals to extract garnet from Kanmantoo’s tailings, unlocking a fresh income source and extending the life of its tailings storage facility.
- Binding agreement signed with Heavy Minerals for garnet recovery
- Hillgrove to receive gross revenue payments plus guaranteed minimum income
- Heavy Minerals to build and operate garnet processing plant at Kanmantoo
- Tailings storage facility life expected to be extended
- Potential transfer of rehabilitation liabilities post mine closure
New Revenue from Old Waste
Hillgrove Resources Limited (ASX, HGO) has taken a strategic step to capitalise on its existing assets by signing a binding Tailings Processing Agreement with Heavy Minerals Limited (ASX, HVY). The deal focuses on extracting garnet; a valuable industrial mineral; from the Kanmantoo Copper Mine’s process tailings and tailings storage facility (TSF) in South Australia.
This agreement marks a significant diversification for Hillgrove, traditionally a copper producer, by unlocking value from what was previously considered waste material. Garnet, widely used in water jet cutting and abrasive applications, has a global consumption of around 500,000 tonnes annually, positioning this venture within a robust industrial market.
Financial Upside and Operational Benefits
Under the terms, Hillgrove will receive 15% of gross revenue payments from the sale of in-specification garnet during mining operations, reducing to 5% after mine closure. Additionally, a $25 per tonne fee applies for out-of-spec garnet used by Heavy Minerals. The agreement guarantees a minimum annual gross revenue payment of $500,000 once production starts, doubling to $1 million when production reaches 100,000 tonnes per annum.
Hillgrove will also receive upfront payments totaling $200,000, split between agreement execution and the final investment decision. These payments provide immediate financial benefit while the garnet processing plant is constructed and commissioned by Heavy Minerals on site.
Extending the Life of Kanmantoo’s Tailings Facility
Beyond direct financial gains, the garnet extraction process is expected to extend the operational life of the Kanmantoo TSF. This extension could defer costly closure and rehabilitation activities, providing operational flexibility. Moreover, Heavy Minerals may assume responsibility for ongoing rehabilitation liabilities after Hillgrove’s mining operations conclude, potentially reducing Hillgrove’s long-term environmental obligations.
Hillgrove’s CEO, Bob Fulker, highlighted the multi-faceted value of the agreement, noting it as a prime example of generating shareholder value beyond traditional copper production. The partnership not only opens a new revenue stream but also strategically manages environmental and operational risks associated with tailings management.
Looking Ahead
Heavy Minerals plans to ramp up garnet production from an initial 50,000 tonnes per annum over the first three years to 100,000 tonnes in the fourth year. This scale-up aligns with the guaranteed revenue thresholds and reflects confidence in the resource potential of the Kanmantoo tailings.
As the garnet processing plant comes online, investors will be watching closely to see how this secondary mineral recovery impacts Hillgrove’s financials and operational profile. The deal also sets a precedent for how mining companies might leverage tailings resources to unlock additional value and manage environmental responsibilities more effectively.
Bottom Line?
Hillgrove’s garnet deal could reshape its post-mining legacy and add a steady revenue stream beyond copper.
Questions in the middle?
- How soon will garnet production commence and meet guaranteed revenue targets?
- What are the detailed conditions for transferring rehabilitation liabilities to Heavy Minerals?
- Could this tailings processing model be replicated at other Hillgrove sites or by other miners?
