Hillgrove Resources posted a record 3,120 tonnes of copper production in Q1 2026, driving a 22% jump in cash to $25.2 million. The company’s exploration at Emily Star and Nugent underpins ambitions to surpass 2 million tonnes annual throughput.
- Record quarterly copper production of 3,120 tonnes
- 22% increase in cash balance to $25.2 million
- Operating mine cash flow rises 16% to $14.6 million
- Stage 1 Emily Star Exploration Drive completed; drilling commenced
- Binding garnet extraction deal signed with Heavy Minerals
Record Copper Production Drives Strong Cash Flow
Hillgrove Resources (ASX:HGO) delivered a robust start to 2026 with a record quarterly copper production of 3,120 tonnes at its Kanmantoo mine, marking the fourth consecutive quarter-on-quarter increase. This operational momentum translated into a 22% surge in the group’s cash balance to $25.2 million, bolstered by an operating mine cash flow of $14.6 million, up 16% from the December quarter.
Despite a slight dip in payable copper sales due to concentrate inventory build-up, the company benefited from a higher average realised copper price of $16,629 per tonne and increased by-product credits from gold and silver, which rose 16% and 17% respectively. All-in Sustaining Costs (AISC) remained within guidance at $6.20 per pound payable copper sold, reflecting disciplined cost management amid rising fuel and transport expenses.
Exploration Progress Supports Growth Ambitions
Hillgrove’s near-mine exploration is gathering pace, with the completion of Stage 1 of the Emily Star Exploration Drive enabling more targeted diamond drilling, which commenced in early April. The company aims for a final investment decision on Emily Star development in the second half of 2026. Meanwhile, development of the Kavanagh North Exploration Drive began late in the quarter, setting the stage for diamond drilling in early 2027.
Recent underground drilling at Nugent and Emily Star continues to reveal promising high-grade copper-gold mineralisation, extending known zones and supporting resource model refinement. These results underpin Hillgrove’s target to ramp up throughput to 1.7–1.8 million tonnes per annum by June 2026, with a longer-term goal exceeding 2 million tonnes per annum.
This exploration momentum is consistent with previous positive drilling updates and development progress, reinforcing Hillgrove’s growth trajectory. Notably, the company has streamlined its tenement holdings to focus on high-priority targets, including the Kanappa prospect, where it recently secured environmental approval for a mid-2026 drilling campaign. This strategic focus follows a comprehensive prospectivity review and is designed to maximise capital efficiency and discovery potential.
Hillgrove’s approach to exploration and development is complemented by its ongoing efforts to insource production drilling, with plans to mobilise a third drill rig in the June quarter to help reduce operating costs.
New Revenue Stream from Tailings Garnet Extraction
In a strategic move to diversify income, Hillgrove entered a binding Tailings Processing Agreement with Heavy Minerals Limited (ASX:HVY) to extract garnet from Kanmantoo’s tailings and storage facility. This deal not only provides guaranteed gross revenue payments starting at $500,000 annually but also promises to extend the operational life of the tailings storage facility and potentially transfer rehabilitation liabilities post mine closure.
Heavy Minerals has already defined an exploration target within the tailings and has been allocated space at Kanmantoo’s processing plant to advance garnet recovery activities without disrupting ongoing operations. This initiative adds a new dimension to Hillgrove’s asset utilisation and sustainability efforts.
Sustainability and Safety Remain Core Focuses
Hillgrove continues to prioritise environmental stewardship and community engagement at Kanmantoo. The company reported zero environmental non-compliances and no community complaints during the quarter. Its Grassy Woodland Revegetation Project is making strides in restoring endangered habitats, while enhanced borehole monitoring and pollutant reporting aim to deepen environmental insights.
On safety, two recordable injuries occurred early in the quarter, prompting investigations and corrective measures. Subsequent months saw no injuries, with a renewed emphasis on operational standards and emergency response readiness. Occupational hygiene monitoring and safety standards reviews further demonstrate Hillgrove’s commitment to continuous improvement in workforce health and safety.
Financial and Operational Outlook
Hillgrove remains on track to meet its full-year 2026 production guidance of 12,750 to 14,000 tonnes of copper and maintain AISC within the $5.75 to $6.25 per pound range. Capital expenditure is progressing in line with plans, with $2.3 million invested in the quarter, primarily supporting Emily Star development and exploration drilling at Kavanagh.
The company’s robust balance sheet and operational improvements position it well to capitalise on copper market opportunities, though its remaining copper hedges at prices below current spot levels may temper near-term revenue upside. Hillgrove’s proximity to Adelaide and reliance on grid power with over 70% renewable electricity provide resilience against fuel supply and cost volatility, a notable advantage in the current market environment.
Hillgrove’s recent progress builds on earlier positive developments, including the company’s substantial Kanappa copper-gold target and ongoing exploration success at Nugent, as detailed in its previous updates. These factors collectively reinforce Hillgrove’s strategy to elevate Kanmantoo’s throughput and extend mine life through disciplined growth and diversification.
Bottom Line?
Hillgrove’s record production and cash flow gains, backed by focused exploration and a new garnet revenue stream, set the stage for a pivotal 2026; though upcoming investment decisions and commodity price swings will test this momentum.
Questions in the middle?
- Will the Emily Star investment decision in H2 2026 unlock a new production phase or require further drilling?
- How will remaining copper hedges at below-spot prices affect Hillgrove’s revenue amid rising copper prices?
- Can garnet recovery from tailings deliver meaningful long-term income and operational benefits?