Hillgrove to Earn 80% of Mutooroo Copper Project via Farm-In Deal
Hillgrove Resources has secured the right to earn an 80% stake in the Mutooroo Copper Project through a farm-in deal with Havilah Resources, leveraging its Kanmantoo processing plant to potentially boost copper output with lower capital risk.
- Hillgrove to earn 80% interest in Mutooroo via staged farm-in
- Pre-feasibility Study funded by Hillgrove with $10 million budget
- Upfront $5 million consideration paid in shares and options
- Potential to raise copper production beyond 20kt per annum
- Havilah retains 20% interest and upside via Hillgrove shareholding
Farm-In Deal Unlocks Copper Growth Potential
Hillgrove Resources (ASX:HGO) has struck a binding farm-in agreement with Havilah Resources (ASX:HAV) to earn an 80% interest in the Mutooroo Copper Project, located in South Australia's Curnamona Province. The deal centres on leveraging Hillgrove’s existing Kanmantoo processing facility to develop Mutooroo’s high-grade sulphide copper resource, potentially boosting Hillgrove’s copper output beyond 20,000 tonnes per annum with a lower capital intensity and reduced execution risk.
The partnership is structured around a phased Pre-feasibility Study (PFS) budgeted at approximately $10 million over 24 months, fully funded from Hillgrove’s cashflow. Initial work will focus on rail logistics and metallurgical test work, followed by broader PFS activities contingent on early success. This staged approach aims to mitigate material risks while preserving capital discipline.
Transaction Terms and Joint Venture Structure
Hillgrove will pay $5 million upfront in fully paid ordinary shares at 4.3 cents each, accompanied by unlisted options exercisable at 5.2 cents, subject to the renewal of Exploration Licence 6592. The shares and options represent about 6.4% of Hillgrove’s fully diluted capital and are escrowed in tranches over 6 to 12 months.
Following the PFS and regulatory approvals, Hillgrove may elect to acquire its 80% interest for a further $35 million consideration, payable in cash and/or shares at Hillgrove’s discretion. The deal also includes a resource expansion payment of up to $5 million if the sulphide resource grows beyond current JORC estimates documented in Havilah’s 2025 Annual Report.
Mutooroo’s Resource Base and Strategic Fit
Mutooroo’s JORC Mineral Resource Estimate stands at 12.5 million tonnes grading 1.53% copper, 0.16% cobalt, and 0.20 g/t gold, containing approximately 192,000 tonnes of copper and 20,000 tonnes of cobalt in sulphide mineralisation. The deposit’s proximity to the Transcontinental railway and the Kanmantoo processing plant; just 200 metres from the rail line; creates a compelling logistics advantage to rail ore for processing, potentially reducing haulage costs and environmental footprint.
Hillgrove’s CEO Bob Fulker highlighted that Mutooroo’s high-grade sulphide mineralisation and favourable logistics align well with their centralised processing hub strategy. He noted that leveraging existing infrastructure could materially reduce capital requirements and execution risk compared to a standalone development.
Havilah’s Technical Director Chris Giles emphasised the opportunity to accelerate Mutooroo into production with minimal capital outlay, under the management of an experienced operator. The PFS will also explore enhancing project revenue through by-products such as cobalt and sulphur, consistent with Havilah’s broader project monetisation strategy. Havilah retains a 20% interest in Mutooroo and a significant shareholding in Hillgrove, maintaining exposure to upside while de-risking development.
Phased Pre-feasibility Study and Development Pathway
The PFS will rigorously assess mine design, logistics, processing options, environmental approvals, and community engagement. Phase 1 focuses on validating rail logistics and metallurgical performance, with Phase 2 expanding to full mine and infrastructure studies. The concept plan involves open-pit and underground mining at Mutooroo, crushing on site, and transporting ore via rail to Kanmantoo for grinding and flotation processing.
This approach avoids the need for a new processing plant or tailings storage facility, limiting capital expenditure to mine development, logistics infrastructure, and minor plant modifications. Local workforce mobilisation from Broken Hill on a drive-in-drive-out basis is planned.
Hillgrove’s farm-in follows Havilah’s recent strategic partnerships in the region, including a $210 million deal with Sandfire Resources for the Kalkaroo project, illustrating Havilah’s multi-commodity project generator model in South Australia’s Curnamona Province. The Mutooroo transaction complements these efforts by focusing on advancing a high-grade copper asset through a lower risk, capital-efficient pathway, leveraging Hillgrove’s operational capabilities and infrastructure. This builds on Havilah’s recent $210M Sandfire partnership and Birksgate copper mineralisation results that underscore the company’s regional momentum.
Bottom Line?
Hillgrove’s farm-in to Mutooroo offers a capital-light route to copper growth, but the project’s success hinges on PFS outcomes and regulatory approvals over the next two years.
Questions in the middle?
- Will metallurgical test work confirm the ore’s compatibility with Kanmantoo processing?
- How will fluctuating copper prices and capital markets impact Stage 2 funding decisions?
- What potential exists for resource expansion beyond the current JORC estimate?
