Heavy Minerals Advances Kanmantoo Garnet Project with Binding Agreement and Funding Talks

Binding Agreement Unlocks Kanmantoo Garnet Production

Heavy Minerals Limited (ASX:HVY) has taken a decisive step toward near-term industrial garnet production by executing a binding Tailings Processing Agreement with Hillgrove Resources Limited (ASX:HGO) on 27 January 2026. This deal grants Heavy Minerals access to the tailings stream from Hillgrove’s Kanmantoo Copper-Gold Mine in South Australia, enabling recovery of hard-rock-derived almandine waterjet garnet. Initial production is targeted at 50,000 tonnes per annum, with potential to double pending permitting and a Final Investment Decision.

The Kanmantoo project offers a distinctive exposure to garnet sourced from hard-rock tailings, contrasting with Heavy Minerals’ alluvial garnet at Port Gregory in Western Australia. This dual geological origin and access strategy diversifies the company’s garnet portfolio across global waterjet and sandblast markets.

Permitting efforts have advanced with guidance from the South Australian Department of Energy and Mines and engagement with the Kanmantoo Community Consultative Committee, reflecting a proactive approach to regulatory and community relations ahead of project scale-up.

Maiden Exploration Target Quantifies Garnet Potential

On 8 March 2026, Heavy Minerals announced a maiden Exploration Target for the Kanmantoo tailings system, estimating 30 to 50 million tonnes grading 17% to 25% garnet, equating to 5.1 to 12.5 million tonnes of contained garnet. This target encompasses both the Tailings Storage Facility and fresh tailings rejected from Hillgrove’s copper concentrator.

The Exploration Target is grounded in Hillgrove’s published Mineral Resources and Ore Reserves, extensive 2025 drilling data, and mineralogical analyses using XRD and QEMSCAN techniques. However, it remains conceptual, with insufficient exploration to define a Mineral Resource under the JORC Code. The company continues metallurgical test work and engineering studies to refine recovery and product specifications.

This substantial garnet inventory forms the cornerstone for Heavy Minerals’ planned processing plant, with IHC Mining providing detailed designs and firm pricing for a 50,000 tonnes per annum wet and dry processing facility, alongside a scalable 100,000 tonnes option configured as dual 50,000 tpa trains. IHC Mining’s century-long expertise in mineral sands engineering underpins these plans. The company is actively pursuing project-build funding across multiple financing structures to underpin construction decisions.

Port Gregory Pre-Feasibility Study Nears Completion

Heavy Minerals is also finalising the Pre-Feasibility Study (PFS) for its Port Gregory Garnet Project, expected for release within the current quarter. The PFS is being prepared by IHC Mining and AMC, adhering to JORC, VALMIN, and AusIMM engineering guidelines. Port Gregory hosts a JORC Mineral Resource of 166 million tonnes at 4.0% Total Heavy Minerals, including 5.9 million tonnes of garnet, supporting a scoping study that envisages a 16-year mine life and an after-tax NPV of approximately A$253 million.

Exploration and assay work continue at the adjacent Red Hill Garnet Project, with 47 composite samples submitted for QXRD analysis and results due in the first half of Q4 FY26. This analytical phase aims to progress Red Hill toward an Inferred Mineral Resource estimate.

Funding Strategies and Working Capital Management

Project-build funding for Kanmantoo and Port Gregory remains a strategic priority. Heavy Minerals is engaged in preliminary, non-binding discussions with multiple counterparties across a spectrum of financial instruments, including project debt, royalty financing, prepay/offtake-linked structures, government grants, and equity. The final funding mix will depend on terms reached and project milestones such as PFS release and Final Investment Decisions.

Meanwhile, the company maintains working capital through its Tranche 2 Royalty Funding Programme and an At-the-Market (ATM) facility with Acuity Capital, which was topped up during the quarter following shareholder approval. In the March quarter, Heavy Minerals drew $375,000 from the royalty programme and $192,000 from the ATM facility, with further draws anticipated in Q4 FY26 to support ongoing operations and project development.

Cash on hand stood at a modest $46,000 at quarter end, but combined with unused financing facilities of $1.8 million, Heavy Minerals estimates approximately 3.5 quarters of funding runway at current expenditure levels. The company also received $19,000 from option exercises and $175,000 post-quarter from the ATM facility, underpinning liquidity ahead of critical project milestones.

Market Engagement and Offtake Discussions

Heavy Minerals has been actively cultivating its customer pipeline, exhibiting at the AMPP Annual Conference & Expo in Houston in March 2026 and engaging in follow-up meetings with US-based garnet distributors and end-users. These exploratory, non-binding discussions aim to lay the groundwork for offtake arrangements supporting both Kanmantoo and Port Gregory projects.

Executive Chairman Adam Schofield highlighted the company’s dual garnet exposures and the progress toward a Final Investment Decision at Kanmantoo, emphasizing shareholder value potential from the emerging production platform.

These developments build on the company’s earlier milestones, including the binding Tailings Processing Agreement and the maiden Exploration Target announcement, positioning Heavy Minerals at a pivotal juncture in its industrial minerals journey.