Hillgrove Resources boosted copper production and cash flow in the June quarter, hitting a 1.8Mtpa run rate at Kanmantoo and securing approval for the Emily Star underground development.
- Kanmantoo achieves 1.8Mtpa production run rate
- Copper output rises to 3,170 tonnes in June quarter
- Net group cash flow jumps 71% to $8.3 million
- Emily Star underground development approved post-quarter
- Mutooroo Farm-In Agreement executed with PFS underway
Kanmantoo Hits Operational Milestone with Sustained Throughput
Hillgrove Resources (ASX:HGO) reported sustained production growth at its flagship Kanmantoo Copper Mine, reaching an annualised run rate of 1.8 million tonnes per annum (Mtpa) in June 2026. This marks a key operational milestone, supporting a fifth consecutive quarter-on-quarter increase in copper production to 3,170 tonnes. The ramp-up has contributed to lower unit operating costs, with the June quarter All-in-Sustaining Cost (AISC) settling at $5.76 per pound of payable copper sold, comfortably at the lower end of full-year guidance.
Operating mine cash flow surged 60% quarter-on-quarter to $23.3 million, underpinning a net group cash flow increase of 71% to $8.3 million. The cash build reflects a robust 36.6% operating margin, driven by higher copper prices and improved by-product credits, notably from gold production at the Nugent deposit. Hillgrove’s cash position strengthened to $32.2 million by quarter-end, bolstered by increased stockpiles of run-of-mine and coarse ore inventory aligned with the processing campaign’s timing.
Emily Star Development Approved, Accelerating Growth Pipeline
Post-quarter, Hillgrove’s board greenlit the Emily Star underground development, establishing a third mining front at Kanmantoo. The decision follows a successful diamond drilling program that confirmed high-grade copper-gold mineralisation with no significant geotechnical risks. Capital expenditure for Emily Star is estimated at $20–22 million, with $6.5–7.5 million earmarked for the second half of 2026. All funding will come from operating cash flow, underscoring the company’s self-funded growth strategy.
Stoping at Emily Star is expected to commence in the second half of 2027, with an updated mineral resource estimate scheduled for release in the December quarter. This development is a tangible step in extending Kanmantoo’s mine life and scaling production capacity. The company has also increased its 2026 major capital guidance to $15–17 million to incorporate Emily Star and the Mutooroo Pre-Feasibility Study (PFS) costs.
Mutooroo Farm-In Agreement and Pre-Feasibility Study Progress
Hillgrove executed a binding Farm-In Agreement with Havilah Resources to earn an 80% interest in the Mutooroo Copper Project, located in northeastern South Australia. The transaction includes an upfront $5 million consideration paid in shares and options, with a commitment to spend up to $10 million on drilling and metallurgical test work over 24 months.
The Mutooroo PFS commenced during the quarter, focusing initially on derisking ore logistics and metallurgical characteristics. Early field activities and preliminary metallurgical test work are underway, with outcomes expected to guide the full test program. The PFS is also funded from operating cash flow, reflecting Hillgrove’s disciplined capital management.
Exploration Advances at Kanmantoo and Regional Prospects
Exploration drilling continues to add to Hillgrove’s resource base, with significant high-grade copper-gold intersections reported at Emily Star and Kavanagh underground and surface programs. Notably, surface drilling at Kavanagh extended mineralisation more than 250 metres below the current decline level, marking the deepest recorded intersection at Kanmantoo.
Hillgrove also commenced drilling at the Kanappa prospect, targeting a porphyry-style copper-gold system approximately 50 kilometres northeast of Kanmantoo. The program is supported by a new environmental permit and aims to test key geophysical anomalies.
Corporate Initiatives and Market Positioning
Reflecting its evolution into a focused copper producer, Hillgrove plans a company name change to Kantra Copper Limited alongside a share consolidation, with shareholder approval sought in August. These moves aim to align the brand and capital structure with the company’s growth trajectory.
Hillgrove is also in the process of appointing a tier 1 banking partner to consolidate security arrangements and support environmental liabilities and hedging facilities. While the company currently has no need for debt, the banking relationship could facilitate future financing options.
The quarter saw no environmental compliance issues, ongoing community engagement, and strengthened First Nations partnerships, alongside a focus on safety and workforce wellbeing. Meanwhile, the administration of Kanmantoo’s electricity provider, Zen Energy, has triggered contingency arrangements, but no immediate cost impact is anticipated.
Bottom Line?
Hillgrove’s June quarter shows operational momentum and disciplined cash funding underpinning a clear growth path, with the Emily Star and Mutooroo projects set to define its next phase.
Questions in the middle?
- How will the Emily Star development impact production and costs beyond 2027?
- What are the key risks and timelines for the Mutooroo Pre-Feasibility Study outcomes?
- Could the electricity provider’s administration affect Kanmantoo’s operational costs or power security longer term?